The cost of student loans falls
Students who took out loans after 1998 will see the interest on their loans set at 0 percent. Students who took out loans before 1998 will have an interest rate set at minus 0.4 percent. This means that even if they do not pay anything off towards their loan, the value will have dropped by the end of the 2009-2010 academic year.
Apparently the decision was taken because loans are already well subsidised and it would be difficult to justify to taxpayers a situation whereby students take out loans in 2009-2010 and their balances are immediately reduced. These changes are going to affect students who have an outstanding student loan taken out after September 1998, as well as applicants for both maintenance loans and tuition fee loans in the current and next academic year.
Loans taken out before 1998 are repaid through a fixed term mortgage style scheme. Interest is linked solely to the RPI. This means that students still paying off debts from pre 1998 will benefit from an interest of minus 0.4 percent.
Written by Sam Peppercorn of
Secured Loans