Student Loan Interest

Pingu1

Does anyone know how the interest is calculated on a student loan? I still paying off mine, Plan 1 (England). The interest is 6.5%. Wondering how long it will be before its paid off. Thanks.

Ed-1

Pingu1 said:

Does anyone know how the interest is calculated on a student loan? I still paying off mine, Plan 1 (England). The interest is 6.5%. Wondering how long it will be before its paid off. Thanks.

Interest on plan 1 is the March RPI inflation rate but capped at the Bank of England rate +1%. So it's currently 6.25% as the Bank of England rate is 5.25% and the March 2023 RPI rate was 13.5%.

Pingu1

6.25% of what? Is it my salary or the loan amount?

Ed-1

Pingu1 said:

6.25% of what? Is it my salary or the loan amount?

That's the current interest rate on the loan. 6.25% of the loan balance.

The repayment rate is always 9% of salary above a threshold. The plan 1 income threshold is currently £24,990.

Pingu1

Thanks, I think I can work it out now.