Mydeposits Chief Criticises Which? Report
15th Aug 2018
Students in England, Wales and Northern Ireland will face even higher interest rate charges on student loans following an increase in the Retail Prices Index.
Interest on student loans for those starting or continuing at university this autumn will be charged at 6.3%, reflective of RPI at 3.3%, plus a 3% uplift. This compares to the current rate of 6.1%.
The rate at which interest is charged has become a contentious issue and ministers say the role of interest rates will be considered in their recently announced review into education and funding.
Although the level at which interest is charged could increase the total amount of debt paid back, it will not increase an individual's monthly repayments, which are determined by the amount of income earned after leaving university.
However, this latest increase comes on the back of a significant rise in September 2017 when rates rose from 4.6% to 6.1%.
While the National Union of Students has recognised the rise is small, they argued it adds psychologically to the burden of debt for young people.
Commenting on the increase, NUS vice-president Amatey Doku said: "Interest rates at 6.3% represent an increase of 0.2 (percentage points), which, although a seemingly small degree, adds to the huge psychological burden that debt has on many students and graduates."
"Absurdly high interest rates are only a small part of student debt problem - which already leaves students from disadvantaged backgrounds with up to £50,000 of debt, most of which is never paid off."
"The current funding model continues to represent a poor deal for students, their families, and the taxpayer."
15th Aug 2018
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