The price for education seems to be insanely high in the UK, especially after the Brexit vote. Recent stats reveal that the rise in UK's inflation, prompted by a decline in the value of the pound since June, will diversely affect students who will definitely be charged substantially more interest on their loans. This, despite several other consumers benefiting from record low interest rates.
Student loan interest rates are tied to March's retail price inflation figure, published earlier this week. Currently, freshers and other students are charged 4.6 per cent, the March 2016 RPI figure of 1.6 per cent, plus 3 per cent, on their loans. However, from September, the figures will rise to 6.1 per cent, made up of the March 2017 figure of 3.1 per cent, plus 3 per cent. Consequently, current students and several other graduates will see the interest rate on their student loan jump to over 24 times the official Bank of England base rate. Those who took out their student loan on or after 1 September 2012, and who have now graduated, will from this autumn be charged between 3.1 per cent and 6.1 per cent, depending on their income.
An expert at money advice website Save the Student, Jake Butler said, “I was expecting an increase to student loan interest this year, but this is worse than expected. It really demonstrates that the interest on loans under the new system is far too high and should be reassessed.” The website however pointed out that those who started university after September 2012 do not start repaying their loan until they are earning over £21,000 a year. It added, “Unless you start off with a graduate salary of higher than £30,000, it's unlikely you will pay off your full loan and interest before it's wiped after 30 years anyway.”
An individual who began university between 1998 and 2011 are currently charged an interest rate of 1.25 per cent, and will stay at this level in September. Those who began university before 1998 are currently charged 1.6 per cent, which will rise to 3.1 per cent.
