London Student

Interest rates for student loans soars to 6.1%

The interest rate on student loans for those currently studying are set to increase to 6.1% this September.

The increase, which will apply to tuition fees and maintenance loans, will see the student loan interest rate go from 4.6% up to 6.1%.

This interest rate applies whilst you are studying and until the April after leaving your course. Once you start earning, the interest rate is dependent on income.

Student loan interest rates are based on Retail Price Index (RPI), a measure of UK wide inflation published by the Office for National Statistics. It is calculated by tracking changes in cost over time of a fixed basket of goods.

The interest rate for student loans is worked out as RPI plus 3%. Since Brexit in June last year RPI has increased from 1.6% to the current interest rate of 3.1%, driven by the decline in the value of the pound.

The higher interest rates will apply to anyone who has taken their loan out since 2012. For students who took their loan out before 2012, the loan rates will remain unchanged.

It will come in alongside the increase in tuition fees to £9,250 for English universities.

As seen with the negative effect of changes within how healthcare courses are funded, the increase in interest rates will discourage ethnic minority, Muslim, mature and female students from taking on the loans and therefore studying. These groups have been shown to be particularly debt averse.

As it stands graduates from English universities are most debt-ridden in the world. A problem that higher interest rate will only make worst.

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Charlie L Jones

London Student News Editor - born in London, now study here and judging by this pollution, probably going to die here too.