Student loan interest rates could rise to 12% this September

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Former_MSE_James_F
Former_MSE_James_F Posts: 115 Forumite
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edited 13 April 2022 at 5:28PM in Student MoneySaving
Student loan interest rates are set to rise for many from September – though the changes are yet to be finalised by the Government. Current students in England and Wales, for example, could see the interest rate they're charged jump from 4.5% to 12%. Meanwhile, many former students with outstanding loans may see rates rise too.  

Read the full story here:
'Student loan interest rates could rise to 12% this September - here's what you need to know'

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  • Nick9967
    Nick9967 Posts: 192 Forumite
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    Not useful to scaremonger really is it? do you really think that the government are likely to be charging interest rate sat 12% to students! not likely is it, bit like it's not likely they'll give pensioners a 10/12% increase, either way they'd be out at the next election, this reminds me of the fuel shortage started by the media! there wasn't one yet it went crazy. Sometimes a little bit of responsible reporting would make more sense than "watch the world is crumbling"!!!
  • TheAble
    TheAble Posts: 1,607 Forumite
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    Nick9967 said:
    Not useful to scaremonger really is it? do you really think that the government are likely to be charging interest rate sat 12% to students! not likely is it, bit like it's not likely they'll give pensioners a 10/12% increase, either way they'd be out at the next election, this reminds me of the fuel shortage started by the media! there wasn't one yet it went crazy. Sometimes a little bit of responsible reporting would make more sense than "watch the world is crumbling"!!!
    It's not really scaremongering - this is simply current government policy. For it to not happen would require a change of policy.
  • NatLou33
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    Question: even with the likelihood of interest rates rising to 12% for the academic year, is it still recommended to take out the plan 2 loan versus paying upfront, given the nature of the loan and period? Thanks
  • grumiofoundation
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    NatLou33 said:
    Question: even with the likelihood of interest rates rising to 12% for the academic year, is it still recommended to take out the plan 2 loan versus paying upfront, given the nature of the loan and period? Thanks
    Given most people will not pay back the capital of the loan with no other information then it would be better to take the loan. 

    Since in this case the money is available upfront there are other things to do with it - for example lifetime ISA for house purchase, stocks and shares ISA, pension
  • NatLou33
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    @grumiofoundation Valid points indeed. Thanks for your thoughts :)
  • Reytons123
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    Hi...my daughter is starting this September. I cannot afford to fund her fully, but could find £9k in Sept to initially pay the tuition fee, thereby not incurring the extortionate rate of 12% on this loan from Sept 22. She would then apply late for her loan, and receive the £9k in March 2023, thereby reimbursing me and also avoiding that initial interest rate spike until the cap is introduced in Mar23 and interest rates are lowered.
    Does this make sense...is this possible does anyone know?
    Thanks...
  • silvercar
    silvercar Posts: 47,106 Ambassador
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    mikemen said:
    The rising interest rates on student loans are causing concern among many students and former students alike. For current students in England and Wales, the rate could jump from 4.5% to 12%, which is a significant increase that many worry will make it more difficult to repay their loans. Additionally, former students with outstanding loans may see their rates rise as well, which could make it even more challenging for them to manage their debt. Whether these changes will be implemented remains to be seen, but in the meantime, many students and former students will likely be monitoring the situation closely.
    This isn’t true. Any increase won’t make it more difficult to repay their loans as the repayments are a fixed percentage of income above a fixed threshold, so won’t change.
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • silvercar
    silvercar Posts: 47,106 Ambassador
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    Hi...my daughter is starting this September. I cannot afford to fund her fully, but could find £9k in Sept to initially pay the tuition fee, thereby not incurring the extortionate rate of 12% on this loan from Sept 22. She would then apply late for her loan, and receive the £9k in March 2023, thereby reimbursing me and also avoiding that initial interest rate spike until the cap is introduced in Mar23 and interest rates are lowered.
    Does this make sense...is this possible does anyone know?
    Thanks...
    It won’t work exactly like that, the loan company pay the university tuition fees direct to the university. So if self financing, the student pays the university direct. Applying for a tuition fee loan late, wouldn’t result in the loan being paid directly to the student, so she won’t have the money to reimburse you.
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • silvercar
    silvercar Posts: 47,106 Ambassador
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    NatLou33 said:
    Question: even with the likelihood of interest rates rising to 12% for the academic year, is it still recommended to take out the plan 2 loan versus paying upfront, given the nature of the loan and period? Thanks
    Only the higher earners are likely to repay the loan in full, so it depends on the likelihood of the student have a high earning and lengthy career. 
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • Reytons123
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    silvercar, thanks for your response.
    I can't then understand that the loan application deadline is 20th May, but you can also apply up to 9 months late? If we applied late, would that mean the Uni gets their tuition fee late also? So rather than self funding initially (as you say, getting "reimbursed" isn't an option) can we apply late, so that the loan is paid as close to Mar23 as possible, thus also avoiding that period of high interest rates?
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