Student Loan Interest Rate Rises By One Third

The increase in inflation since June 2016, caused largely by the slump in the value of the pound since the Brexit vote, has been blamed as the cause of a new rise in interest rates for student loans. The rate will rise from 4.6% to 6.1% in September. (Helping children pay for their education, and avoid the debt from student loans, is one of the reasons some people apply for pension loans.)

The Guardian reports

“Student loan interest rates are tied to March’s retail price inflation figure, published on Tuesday. At the moment, new starters and current students are charged 4.6% – the March 2016 RPI figure of 1.6%, plus 3% – on their loans. But from September this will rise to 6.1%, made up of the March 2017 figure of 3.1%, plus 3%… As a result current students and a sizeable number of graduates will see the interest rate on their student loan jump to more than 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% and 6.1%, depending on their income… Students are also paying the price for being tied to the RPI rate, which is typically higher than the consumer prices index figure and is now relatively little-used. The latest CPI inflation figure for March was 2.3%.”