Student Loan Rate Set to Fall

Mon, 11 Aug 2008

Interest rates on student loans are set to fall, the Student Loans Company has revealed. Students were recently dismayed to learn that rates on student loans were set to double, from 2.4 per cent to 4.8 per cent, prompting thousands of students to join a group protesting against the increase on a social networking site. However, as of September, that rate will fall to 3.8 per cent, due to its link with the rate of inflation .

For the purpose of setting the student loan interest rate, the rate of inflation is set by the rise in the Retail Prices Index during March. Fortunately for students, March was the only month that the RPI increased by less than 4 per cent, having risen by 4.1 per cent and 4.6 per cent in the previous months.

For the 2.6 million former students currently paying off their student loans, those with the average loan size of £9,112 will save roughly £5 per month. This year, students are eligible for a loan of up to £4,625, though students at London universities can loan as much as £6,475 each year. The loans are repayable as soon as the borrowers start earning £15,000 a year.
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