Student Loans increased to 4.8% pa

Discussion in 'Off-Topic Chat' started by SuperHorn, Feb 13, 2008.

  1. SuperHorn

    SuperHorn Member

    It's been brought to my attention that the Student Loan Company are now charging 4.8% on loans from 01/09/2007 previously before that is was only 2.4%

    We all knew when we took out a student loan that it will be repaid at the rate of inflation currently @ 2.3% so how can the SLC now introduce without notification this new rate.

    Additionally, how can this be justified double the previous rate an they a non profit making organisation.

    My wife took out £9000 SL and has been repaying £80per month for the last 3 years but still owes £9430 and this before the 4.8% increase. I rang them today when I received literature confirming the new rate. However I had to ask them what the previous rate was as this was not included.

    It's time to act for all our futures and the furture of the next generation(s)

    If you disagree with this appalling change in the rate of interest please refer to the SLC website and contact them to make an official /formal complaint.

    I am also writing to my MP and would suggest to everyone affected to do the same. Together we can change policy if enough of us are bothered to act.
  2. New Trumpet Boy

    New Trumpet Boy New Member

    That;s really bad I for one will be contacting them.
  3. David Mann

    David Mann Member

    Rather than being a non-profit organisation, SLC must be a Loss-Making (ie subsidised by the taxpayer) organisation, as they must have to get their working capital from either banks or government, and seem to have been lending it out at less than the Bank of England base rate. So the answer to "how do they justify it" seems to be "those are the rules".
    This isn't to knock your personal circumstances btw, this must have come as a nasty surprise.
    I think degrees have been over sold in the last few years, and the promised benefits don't materialise for most people. So people are encouraged to get into debt, then struggle to find a job with enough pay to make a significant dent in it, just at the time when they might want to buy a house etc.

    From :

    Jointly owned by the Department for Education and Skills and the Scottish Office, the Student Loans Company has doubled its interest rate on student loans from 2.4% to 4.8%. The rate used is linked to the retail price index (RPI) as its stands in March of each year. In March 2006 it was 2.4%, and in March this year RPI was 4.8%. In July of this year RPI stood at 3.8%.
    The rate has not been at this level since 1991. A Student Loans Company spokesman said that the rate was unusually high, and they expected the rate to come down next year.
    Unfortunately, students taking a loan out now are lumbered with the 4.8% rate for at least a year as it is fixed for that long. Loans start accumulating interest immediately and continue to do so until they are finally repaid. Although the rate is fixed for a year, unlike a commercial loan from a bank it is variable, and will change when set again each year.
    Student loans begin to be repaid from the April after graduation, once graduates are earning at least £15,000 a year. Repayments are calculated as 9% of their income. A typical graduate leaves university with an outstanding student loan of around £12,000 so, at the current rate of 2.4%, £288 would be added if no repayments were made. However with the rate at 4.8%, this would result in £576 being added in interest – double the current amount.
  4. Thirteen Ball

    Thirteen Ball Active Member

    Funny how the SLC use the RPI figure (correctly) to charge us, while that dull-witted chap in No.10 stubbornly sticks by the base rate figure (Usually less than half that) when deciding what payrise to offer government and public sector workers.

    (This offers private sector employers all the ammunition they need to peg back their cost of living rises too.)

    Funny, if you're a well paid exec level staf member, say on £30k - 2% translates as a £600 per year pre-tax, which is alright.

    Now imagine you're a full-time admin grade worker at the bottom of the pile, pulling in £13k - then your rise is £260 per year. Or put another way, a derisory £21.60 a month.

    Starts to look like percentage pay-rises only benefit those who already HAVE enough money - and not families nearer the breadline.

    If payrises were more heavily weighted for lower earners across the board, consequently the appeal to claim JSA is reduced, the benefit bill also so, more people are liable to pay their own council tax and rent (Rather than the state paying) so local authorities have more money to invest in roads, public safety etc....

    In stead at the moment we have fuel prices up 10% on the year, energy bills up 12-15%, RPI index inflation up over 4.1%, 100% hike in the student loan rate.....

    And plenty of people can STILL pay Mr Livingstone's much vaunted £25 charge without feeling the pinch - simply by putting it on their company expenses.

    (I can't confirm for definite, but I doubt Mr Brown pays it from his own pocket - given that MPs and Ministers can use our money to pay their council tax!)

    Andi - seriously considering emigration.....
    Last edited: Feb 14, 2008
  5. Sharpy

    Sharpy Member

    I'm in the Armed Forces and we've been given a 2.6% pay rise. Great but then they put up our food and accomodation charges up by anything from 1.6% to 3.8% I think it is.

    Its taken me nearly 5 years to get my £9000ish SL down to £935. Due to the fact that I didn't earn enough and was getting charged £10 a month interest. Its only because I started to overpay my loan that Im now in sight of actually paying it off before the end of the year!! I know I probably got loads of paperwork on my loan when I took it out in 95/96/97, but it wasn't explained to me very clearly at all. That said, I couldn't have afforded to go to Uni without it either so would have still taken them. And I used to work weekends and holidays too!!!

    I must have drunk more beer than I'd like to admit too...........
  6. geordiecolin

    geordiecolin Active Member

    I wouldn't moan, I would love to been in such a position!!

    ...sounds familiar!
  7. onebandman

    onebandman New Member

    This is interesting.
    I stuck most of my student loan in a high-interest ISA when I got it and it is still there now. I am now gradually paying off the loan - there are deductions to the SLC on my monthly wage slip but it's only about £20 per month. I've got savings that mean I could pay the loan off tomorrow if I wanted but I figured that there was no point because the interest on my ISA was substantially more than that on the loan.
    Do you think this increase on the loan interest means I should think about paying more off?
  8. marc71178

    marc71178 Member

    I'd say that the only reason you'd want to pay more off is if the interest on your savings is less than the 4.8% on the loan.
  9. onebandman

    onebandman New Member

    That was my reasoning exactly. I think I'll stick to that. It was just some people seemed surprised when I said I hadn't paid it off even though I had the means to.
  10. sugarandspice

    sugarandspice Active Member

    £9000?! I wish, I'm probably going to come out with about £20,000 of student loan debt when i finish my 4 year degree!

    They didn't actively notify me of the changes, i just noticed it on my monthly statements.

    Can't say i'm happy about it, but at the end of the day i couldnt go to uni without the loan, at least now i'm doing what i love and hopefully will get a good job at the end of it!

    Just got to get on with it i guess!
  11. vonny

    vonny Member

    Kelly I empathise with what you are saying, as I now owe about £25,000 in student loans after completing 4 years of Higher Education.
    I'm not happy with the changes but you have to be prepared sometimes.
    I wouldn't have been able to become a teacher if student loans weren't available. I'm thankful that I was given the opportunity even if I am in debt because I am finding my career rewarding in so many ways.

    All the best with your studies

    Yvonne x
  12. SuperHorn

    SuperHorn Member

    People the idea is not how much you borrowed or how low you are paying off your loan each month. The point is that the interest rate is 4.8% and the SLC did not notify everyone by letter before 01/09/07 with the change in interest rate. They are governed by the FSA - Financial ombudsman and like our mortgages / credit cards a period of notice must be given when there's a change in your terms and conditions of which you would have signed.

    Please complain to SLC and Financial ombudsman about this rate and when / how it took place.

    Together we can change things if there are enough of us who can be bothered to complain.

    Tell your frerinds and every one you can.
  13. vonny

    vonny Member


    Are you actually complaining about the percentage rate increase or the fact they didn't inform you of the changes?
    I was looking through some papers a couple of days ago and I came across a letter from the SLC informing me of this change.

    I personally feel that if I had loaned the money from a bank the rate would have probably been around 3 times more than the SLC. I wanted to go to university and I knew that I would be in debt as a result. That was the choice I made so I was prepared for changes because they do happen in life...
  14. DeafeningRoar

    DeafeningRoar Member

    You could always "emigrate" to Gordon Brown`s Scotland....thanks to the Barnett formula the Scot`s get their higher education free!!!
  15. geordiecolin

    geordiecolin Active Member

    So in essence, I earn my wages, a portion of which pays off my own loan, then I pay my tax which subsidises students in Scotland. Excellent.

    I really wish the Scots would either sever all ties with the UK or stop all this semi-devolution business, especially given Scots MPs get to vote on issues in England but English MPs can't do similar in Scotland.

    Don't get me wrong, I think a lot of the stuff in Scotland makes more sense than in England but I can't help feeling that Scottish students get a better deal because its predominantly funded by English taxpayers.

    Anyway, thats a different rant for a different thread and a different day.....
  16. Craigsav83

    Craigsav83 Active Member

    Point one - nonsense. We could all gripe about that, and the fact that we are paying for subsidised prescriptions in Wales or whatever, its a part of being from the UK, different parts use their money differently. Do you really think that people from Scotland are particularly pleased about their tax money paying for the London Olympics. Swings and roundabouts.

    Point two - at this moment the Scottish National Party are in Holyrood, so why should English MP's get a say?

    In my opinon, things are fine as they are, I'm a Scottish student, paying my way at an English University, its probably cost me more than it would staying in Scotland, but there isn't a music course anywhere like Salford, so I had no choice really!

    I think the rise was inevitable, everything else has gone up recently, apart from my wages - typical. When I graduate in July, I'll probably owe in the region of £25000, and thats having worked through my studies too, so it makes a big difference in thinking ahead.
  17. Kilted-Cornet

    Kilted-Cornet New Member

    Utter bull-poo. It might surprise you to know that we in Scotland also pay tax. No seriously, we do. It’s not all handed to us on a plate from you hard-working English. And if you want to get into a debate about who is subsidising who, a little bit of research would show that the north of England is "subsidised" to a far greater degree than any other part of the United Kingdom. It just suits English politicians and media-scum to score cheap political points by grouping all England into one pot so that the fact that the south east is subsidising the whole of England can be covered up.

    No offence meant though, it just winds me up to see people repeating English media hype. To get slightly more back on topic, higher education should be free for all (as it was when I were a lad). But you can’t blame the Scots for the fact that it isn’t in England. The decision to charge fees was taken at Westminster. All we have done up here is change that for the people that our parliament can legislate for. Maybe what you need to do is elect a government that gives a sh1t about students!!

    I have to agree that a lot of stuff in Scotland make more sense, but we can't help that, we're just better ;) (unless you count rugby of course)
  18. Pythagoras

    Pythagoras Active Member

    It only passed the vote at Westminster thanks to votes by Scottish MP's though. Again, not the fault of the scottish people but galling none the less.
  19. geordiecolin

    geordiecolin Active Member

    Hang on, we as in the English should elect a govt that cares about students?? But don't scots and welsh mps form a large part of parliament and incidentally a significant proportion of Labour's majority....

    As I stated previously, I think the Scots way of doing this is the right way, but I can't help feeling that if they were left to go it alone, the Scottish Parliament would suddenly find itself a little short of cash.....
  20. Kilted-Cornet

    Kilted-Cornet New Member

    Not really a "large part". Between Scotland and Wales we have 99 out of 646 seats. London actually has more MPs than Scotland and it has its own Assembly (although I know it’s not the same as the Scottish Parliament or Welsh or NI Assemblies). We would be hard pushed to force anything on an unwilling House of Commons. In saying that, I'm all for English votes for English matters. I think you'll find the majority of Scots feel the same; it's the MPs who won't go for it. Incidentally, the SNP MPs at Westminster don't get involved in “England only” debates and only vote on UK wide or Scottish matters. Seems sensible to me!

    I'll leave your last paragraph for another day. Suffice to say, I don't think it's quite as clear cut as your media would have you believe.

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