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Original poster

What the student loan interest rate announcement means

39 replies

abigailfoster · 13/04/2022 17:44

There is a lot of scary posts online currently, i just wanted to help decode some of the statistics.

First up, the repayments you make will not be going up.
The loan value itself will be going up
Currently the student loan increases by RPI+3% and until recently its been about 4.5%
From Sep 22 to Mar 23(when a cap comes into play) the rate for higher earners so those over £49k will go up to 12%.

Questions?

OP posts:
EmpressCixi · 18/04/2022 17:25

@titchy

They don't 'go' anywhere. They're not ring fenced. They go the same place as tax and NI (which isn't put into another special pot either).
@titchy Sorry, no but student loan repayments and interest do NOT go to the Government. They go to the SLC, and are profit. They are not tax payments as much as Martin Lewis would like to compare them to.
titchy · 18/04/2022 19:43

The SLC is fully owned by the Government. The Gov funds it, graduates pay a bit back - about half the total debt is paid back (the RAB charge).

Higher earners may find they payback a few months extra because of the rate hike, but the high rates are only till next March so they generally pay relatively little in interest.

user1497207191 · 19/04/2022 10:12

@titchy

The SLC is fully owned by the Government. The Gov funds it, graduates pay a bit back - about half the total debt is paid back (the RAB charge).

Higher earners may find they payback a few months extra because of the rate hike, but the high rates are only till next March so they generally pay relatively little in interest.

SL debts have been sold off in the past to financial institutions, but it seems they've stopped doing that.
titchy · 19/04/2022 10:35

I'm sure they'll sell off plan 2 loans at some point!

WoolyMammoth55 · 20/04/2022 22:24

titchy · 18/04/2022 17:14

[quote WoolyMammoth55]@SickAndTiredAgain oh my god! I'm really shocked about paying it back til I'm 65?! I would swear on my life that in 1998 we were all told the debt would be wiped in 30 years if we hadn't repaid! Did I somehow hallucinate that? (I was not a psychedlic-using teen!) Have they changed the rules since we took out our loans?

My jaw is on the floor right now... That's really not what I thought I signed up to![/quote]
It's still 30 years for you.

@abigailfoster I know it's off-topic, but can you confirm your understanding about when the loan is written off for Plan 1 in 1998? Everything I can find online now says I'll be repaying until I'm 65. But in 1998 we were told it was written off after 25/30 years (I can't remember exactly, but I know we were told it would happen!)

If it's now not written off until retirement age, when did that change take place? It seems pretty shit to change the T&Cs so dramatically after the fact... :(

I'd be really grateful for anyone who can shed light. Honestly, this is what we were told 24 years ago, I'm not mis-remembering. I don't have any paperwork that I can find except statements so it'll be hard to prove. Gutted over here!

Original poster
abigailfoster · 21/04/2022 16:19

EmpressCixi · 18/04/2022 17:16

@Chewbecca

Does anyone know where the interest 'goes'? I.e. does the govt or SLC profit from it or is it necessary for the rates to be this high to balance the non payment by lower earners?
It is SLC profit. The student loan money doesn’t come from the government but from the Student Loan Company, a private company. It is regulated by the Government. The Government then pays off your loan balance if any is left after thirty years.

The OP is a bit disingenuous saying repayments won’t go up. The monthly repayment won’t, but if you are a middle to high earner on track to pay off your loan before the thirty year term, the increase in interest rates will add extra YEARS of EXTRA REPAYMENTS to your life.

I just don't want to convey an incorrect message. The amount monthly wont go up but yes you are right it is going to take longer to repay/the loan amount will increase.

OP posts:
LouB76 · 21/04/2022 16:31

@Callisto1

It seems that student loans are becoming a graduate tax by stealth! If the life of the loan is 40 years what happens to mature students? Do they have to repay past retirement?
Depends what their pension income is I think.
titchy · 21/04/2022 17:06

@WoolyMammoth55

@abigailfoster I know it's off-topic, but can you confirm your understanding about when the loan is written off for Plan 1 in 1998? Everything I can find online now says I'll be repaying until I'm 65. But in 1998 we were told it was written off after 25/30 years (I can't remember exactly, but I know we were told it would happen!)

If it's now not written off until retirement age, when did that change take place? It seems pretty shit to change the T&Cs so dramatically after the fact... :(

I'd be really grateful for anyone who can shed light. Honestly, this is what we were told 24 years ago, I'm not mis-remembering. I don't have any paperwork that I can find except statements so it'll be hard to prove. Gutted over here!

It looks like you're liable till age 65 Sad https://www.gov.uk/repaying-your-student-loan/when-your-student-loan-gets-written-off-or-cancelled
rachelohrachel · 21/04/2022 17:19

WoolyMammoth55 · 20/04/2022 22:24

@abigailfoster I know it's off-topic, but can you confirm your understanding about when the loan is written off for Plan 1 in 1998? Everything I can find online now says I'll be repaying until I'm 65. But in 1998 we were told it was written off after 25/30 years (I can't remember exactly, but I know we were told it would happen!)

If it's now not written off until retirement age, when did that change take place? It seems pretty shit to change the T&Cs so dramatically after the fact... :(

I'd be really grateful for anyone who can shed light. Honestly, this is what we were told 24 years ago, I'm not mis-remembering. I don't have any paperwork that I can find except statements so it'll be hard to prove. Gutted over here!

Show quote history

I'd like to know this too @WoolyMammoth55. I started my course in 1998 and graduated in 2002 (Scotland so 4 years for Honours) - I'm not sure which Plan I'm on. I still owe £9k as I pretty much just pay off the interest each year and have never been in a position to make overpayments.

Xenia · 21/04/2022 17:38

It looks like age 65.

You can do google searches limited by time eg 1998 - let me see if I can find articles about those starting in 1998 and their student loans in England.

"20.22 The current student loans scheme for living costs is based on mortgage-style repayments, but with deferment for those on lower incomes. Once a graduate's earning reach 85 per cent of national average earnings (£15,792 in 1996/97), payments start continue over a fixed period - five years for those with up to four loans, and seven years for those with five or more loans. The monthly amount repaid depends on the total size of the debt rather than on the borrower's income (once it exceeds the threshold for payments). We understand that, when the loans scheme was first introduced, the Government's intention was the payment periods would be extended over time as the average level of debt increased, in order to keep monthly payment levels manageable. However, to date, no such extensions have been implemented." www.educationengland.org.uk/documents/dearing1997/dearing1997.html
That seems at odds with what is now being stated about age 65 for Plan 1 loans - the first ones. I graduated aged 20 in the days before student loans - my parents made a very very tiny minimum grant up to the full grant. So that would have been 45 years from then to age 65 were that scheme in place for me.

lightand · 21/04/2022 17:41

I have always told anyone I knew had one, to repay when they can.

Who on earth would trust the Uk government to keep to it's word on anything.

Always knew that trouble would come one day.

NoWordForFluffy · 21/04/2022 18:04

@WoolyMammoth55 , all I can find historically online is a website in 2011 which said write off date was at age 65. I've not found anything before that yet.

The 5/7 year repayment for loans is the old (mortgage-style) loan, so not relevant.

I'll keep hunting to see if I can find something.

BabyMoonPie · 21/04/2022 18:31

@Woolymammoth55 - it's 65. We were at uni at the same time so I got excited at the potential for it being written off after 30 years but I checked the government website and it's 65

Xenia · 22/04/2022 08:21

Sorry, my quote above was about the loans BEFORE plan 1. I see from wiki and that shows those going in 1998 - the people above on the thread - seem to have been the first people who were under the proper new plan 1 SLC system. (My daughters both had the £1k a year fees (which I paid so no loans in their cases)).

""Introduction of tuition fees
In 1997, a report by Sir Ron Dearing recommended that students should contribute to the costs of university education. The Labour government under Tony Blair passed the Teaching and Higher Education Act 1998 which introduced tuition fees of £1,000 per academic year to start in the 1998/9 academic year.[4] In addition, maintenance grants were replaced with repayable student loans for all but the poorest students. The total loans provided by the SLC increased from £941 million in the 1997/8 academic year, to £1.23 billion in the next year, when tuition fees took effect.[

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