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Still Got A Student Loan From Pre 1998?


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From MSE today:

Student loan rate jumps to 4.4% for 100,000s

3.7m past students face a rate hike: find out what to do

Student loan interest rates for the new academic year kick in today (Wed). Last year's interest free or even shrinking loans are making way for charges of up to 4.4% - depending on when you started your studies.

Pre-1998 loans now 4.4% (was -0.4%). Here, the rate depends strictly on inflation (RPI) in the prior March; last year that was negative, so the debt actually shrank. This year, the 350,000 graduates still with these will pay a big 4.4%, ie, £440 interest a year per £10,000.

Post-1998 holders & new students pay 1.5% (was 0%) & it could rise. The rate's the LOWER OF inflation in the prior March, (4.4%) OR UK base rate (0.5%) plus 1% point. So the 3.3m graduates with these loans outstanding will now pay 1.5% (£150 interest a year per £10,000 debt), but if rates rise this academic year, the student loan rate will too, to a max 4.4%.

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Finished paying mine in March, so got to see the balance go down a pound or so before it cleared. I remember when student loans were perceived as virtually interest free, whereas now the are over 5 times the rate of my mortgage. How times have changed!

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