Interst rates for student loans

[~kaz~]

How much interest do you have to pay when you are paying back a student loan?

[wheresmyplacebo]

i believe its the RPI retail price index,which is how much normal good prices are rising, so i think the loan doesnt actually increase in real terms

[WLH]

Base rate + 1%

If you are thinking of taking it out, then IMO probably best only to take it out if you need it, as opposed to investing it, saving it, etc. as you will have to repay it at a higher rate of interest than inflation later on. But only advice. Do what is best for you

[Kermit]

Originally posted by will haycock
Base rate + 1%

Excellent advice. Except that it is completely and utterly wrong.

Loans from the Student Loans Company are tied at the rate of inflation based on the Retail Prices Index. It is not an interest-free loan because it is not charged at 0%, but the amount you pay back is the amount you borrowed, in real terms at least.

Current rate is a smudge under 3% I think.

[Kermit]

From the SLC website:

The interest rate is linked to the rate of inflation (The interest rate from 1st September 2003 is 3.1%). Interest accrues from the day you receive the first instalment of your loan.

Ignore any advice that says anything different- it is incredibly wrong.

[~kaz~]

ok :confused:

[Kermit]

The interest rate is tied to inflation, and inflation is at about 3% at the moment.

As soona s you take out your first loan pound you are charged interest, and the interest charged is added to the total you owe. This is called compound interest, where you pay interest on interest.

The amount you pay in interest depends on how long it takes you to pay back the amount you owe. As it is compound interest the quicker you pay it off the less you are charged.

[WLH]

Originally posted by Kermit
Excellent advice. Except that it is completely and utterly wrong.



Ok, I take back that advice then lol :blush:

[budda]

There have been a couple of occasions where they havent risen the interest rate for a month when technically inflation was a bit higher. So for that one month you are sort of making money on the loan, sort of.

[wheresmyplacebo]

Originally posted by Kermit
The interest rate is tied to inflation, and inflation is at about 3% at the moment.

As soona s you take out your first loan pound you are charged interest, and the interest charged is added to the total you owe. This is called compound interest, where you pay interest on interest.

The amount you pay in interest depends on how long it takes you to pay back the amount you owe. As it is compound interest the quicker you pay it off the less you are charged.

im in a 4yr course, im screwed then :p

[budda]

Fuck it, its not really money, you dont have to start paying it back for a while.

[Kermit]

Originally posted by wheresmyplacebo
im in a 4yr course, im screwed then :p

It's free money, really. You pay back the amount you owe, end of story.

Better than getting a job, non?

[budda]

Sure is, all you dossers will learn soon enough!

[panda eyes]

just a quick note.
After a year on the dole and defering payment,
they sold my load to another company who
forced me to start paying it back. Only £20
a month but... :-(

[budda]

Maybe they wrote you off as a bad debt and passed you over.

[Kermit]

Originally posted by panda eyes
just a quick note.
After a year on the dole and defering payment,
they sold my load to another company who
forced me to start paying it back. Only £20
a month but... :-(

The Student Loans Company don't do that.

If you are earning elss that £10,000pa then you don't make payments. They will take payments until you are 65. They cannot charge more than the RPI rate.

So I think you're getting confused.

[budda]

Does anyone know what happens if you go abroad?

[Kermit]

Originally posted by bongbudda
Does anyone know what happens if you go abroad?

You have to tell them if you will be resident or working for a period in another country, but I'm not sure what else.

http://www.slc.co.uk

[budda]

So if I run and dont come back I'll be alright, but if I come back I'm knackered.

[Kermit]

Originally posted by bongbudda
So if I run and dont come back I'll be alright, but if I come back I'm knackered.

Have they plugged the loophole yet where you can decalre yourself bankrupt and get it all written off?

[budda]

You cant declare yourself bankcrupt without actually being so, and it causes no end of hassle if you ever want to buy a house, get a loan....etc.

The Student Loans Companies in the US dont let you do that, they just 're-structure' your loan repayments for you.

[Sa-ra-ra-ra]

No, they haven't plugged that hole yet, but i wouldn't do it just because of the immense amount of hassle it'll cause later in life.

[Kermit]

Originally posted by Sa-ra-ra-ra
No, they haven't plugged that hole yet, but i wouldn't do it just because of the immense amount of hassle it'll cause later in life.

I have no intention of.

I just find it amusing.

[budda]

I think the only way out of US ones is to die, and even then I think they carve up your body for organs to sell.

But then US student loans can easily be above $100,000