Student Loan Guide

Student loans are organised by the government through the Student Loan Company SLC.  The principle for Student Loans is that they should affectivity be free of charge as the rate is set in line with inflation. The amount that you can borrow depends upon your parent’s finances unless you are over 25 or have financially supported yourself for more than three years, or are caring for a child and you have no living parents.  

You only start to pay the loan back once you have finished or left University and are earning over £15,000 a year.  If you are not earning over £15,000 a year you won’t have to make any loan repayments and if you started your course after September 2006, after 25 years all of the outstanding debt is wiped clean.

If you are earning over £15,000 a year then the amount that you pay back is 9% of whatever you earn over £15,000. So if you earn £20,000 a year you will pay back 9% each year of the £5,000 that you earn over £15,000 which is £450.

Rates of interest are set in line with inflation and in particular, rates are set each September based on the Retail Price Index RPI from the previous March.  There are however are a couple of caveats relating to this.  The most important being that the Government can chose whether to charge interest or charge none at all.  The reason for this is so that the taxpayer doesn’t have to fund a reduction in the student loan debt if the RPI index is negative.  This March’s RPI figure is -0.4% so if this rate was applied to all loans borrowers would see the actual balance reduce, and the taxpayer would fund this.  Currently rates are 1.5% for post 1998 or 3.8% for pre 1998 loans so the Government has decided that starting in September the rates will drop to 0% and -0.4% respectively. 

Not found what you are looking for? 

• compare personal loans and search the market online for the best low rate unsecured personal loans
• search the whole of the market online and compare secured homeowner loans using our secured loan calculator
• compare bad credit personal loans online to get the best bad credit loan rate  
• struggling to get credit and have been turned down for a loan use our free refused credit tool
• Find popular loan companies
• Debt problems? Get debt help, with debt consolidation loans, IVAs and Debt Management Plans

Dan Gale, Moneyextra.com May 2009

2009-05-21 13:18:11 © Moneyextra.com