From the beginning of the month new interest rates have been applied to student loans.
The student loan interest rate is based on the previous month’s figures; the lowest of either the Retail Prices Index (RPI) measure of inflation or bank base rate, calculated from a group of high street banks rates, plus 1 per cent.
RPI was 4.4 per cent and banks base rate is now 0.5 per cent, so the banks base rate plus 1 per cent, giving the new 1.5 per cent rate will be in place for the next 12 months.
Anyone who took out a student loan before 1998 will pay 4.4 per cent interest, anyone who took out a loan after this date pays the 1.5 per cent interest rate.
Student loan interest rates may also increase over the course of the next 12 months in line with any Bank of England and base rate increases.
These new interest rates put in place by the Student Loans Company will affect around 3.3 million people who took out their student loans after 1998 and just over 355,000 people who took out a loan before 1998.
Craig Gedey Marketing Manager at Debt Advisory Line said: “Paying interest on a student loan could leave thousands of people struggling to keep up with repayments on other priority debts.”
“Anyone who finds themselves in this situation should consider contacting a professional debt management company and speaking to a qualified debt adviser about calculating an income and expenditure report.”
“At Debt Advisory Line our award winning Debt Management Plans have helped thousands of people so do not hesitate to contact us on 0800 157 7254 today.”