Has my student loan been accruing the right amount of interest?

slclifetimevictim

I was reading the arcticle on MSE which talks about the interest applied to a Plan 2 student loan (new account so I can't provide a link). It says that, from the April after graduation, the interest your loan accrues is calculated based on your salary. If you earn less than the Plan 2 threshold, your interest is RPI. It then increases as you earn more, up to a maximum of RPI+3% when you're earning £49,310+.

- I graduated from my bachelors in June 2017 and from my masters in Oct 2018.
- I was unemployed from Oct 2018 to Sept 2019.
- In the tax year 2019-2020 I earned less than the Plan 2 threshold.

Based on these facts I would have assumed my loan would accrue interest at a rate of RPI from April 2019 to April 2020, but it continued to accrue RPI + 3% for this period (cross referencing with the GOV.UK's published rates). The other years of my Plan 2 loan look to be correctly adjusted. 

Have I misunderstood something? Has the interest been applied correctly? Has anyone else noticed anything like this?



N.B. I also wasn't sure if the interest scaling rule applied to graduation from the course which the loan was supplied for (i.e. if I graduated from my bachelors in June 2017, does the interest rate decrease to RPI in Apr 2018 if I am studying for a masters on a post-graduate loan?).

Ed-1

slclifetimevictim said:

I was reading the arcticle on MSE which talks about the interest applied to a Plan 2 student loan (new account so I can't provide a link). It says that, from the April after graduation, the interest your loan accrues is calculated based on your salary. If you earn less than the Plan 2 threshold, your interest is RPI. It then increases as you earn more, up to a maximum of RPI+3% when you're earning £49,310+.

- I graduated from my bachelors in June 2017 and from my masters in Oct 2018.
- I was unemployed from Oct 2018 to Sept 2019.
- In the tax year 2019-2020 I earned less than the Plan 2 threshold.

Based on these facts I would have assumed my loan would accrue interest at a rate of RPI from April 2019 to April 2020, but it continued to accrue RPI + 3% for this period (cross referencing with the GOV.UK's published rates). The other years of my Plan 2 loan look to be correctly adjusted. 

Have I misunderstood something? Has the interest been applied correctly? Has anyone else noticed anything like this?



N.B. I also wasn't sure if the interest scaling rule applied to graduation from the course which the loan was supplied for (i.e. if I graduated from my bachelors in June 2017, does the interest rate decrease to RPI in Apr 2018 if I am studying for a masters on a post-graduate loan?).

The postgraduate loan is not a plan 2 loan. It accrues interest at RPI +3% every year (subject to the prevailing market rate cap).

All plan 2 loans for the same course become eligible for repayment the April after leaving the course when interest changes from RPI +3% (subject to the prevailing market rate cap) to between RPI and RPI +3% (subject to the prevailing market rate cap).

slclifetimevictim

@Ed-1 Thanks, I was aware that the PG loan is different and is a flat RPI+3%.

Ed-1 said:

All plan 2 loans for the same course become eligible for repayment the April after leaving the course when interest changes from RPI +3% (subject to the prevailing market rate cap) to between RPI and RPI +3% (subject to the prevailing market rate cap).

So from Apr 2018 (the April after graduation from bachelors) it should have decreased to RPI, until the point at which I started earning above the threshold?

slclifetimevictim

I should have clarified, the Plan 2 only covered my bachelors. I took out a separate PG loan to cover my masters.

Ed-1

slclifetimevictim said:

@Ed-1 Thanks, I was aware that the PG loan is different and is a flat RPI+3%.

Ed-1 said:

All plan 2 loans for the same course become eligible for repayment the April after leaving the course when interest changes from RPI +3% (subject to the prevailing market rate cap) to between RPI and RPI +3% (subject to the prevailing market rate cap).

So from Apr 2018 (the April after graduation from bachelors) it should have decreased to RPI, until the point at which I started earning above the threshold?

Yes it should and the RPI rate used changes on 1st September each year (based on the RPI for the prior March).