Interest charged on student loans set to rise

23 April 2010

Almost three million students and graduates can expect to see the interest rate on their student loans rise in September, following a rise in the Retail Price Index (RPI), the BBC reports.

Interest rates charged on student loans are based on RPI (a measure of inflation) each March, and this year, RPI rose to 4.4%, leading to an expected increase from the current 0% interest for some university graduates.

However, rates charged on student loans are different depending on when the loans were taken out. Loans taken out before 1998 have their interest rates set at the level of the RPI in March, while loans taken out after 1998 have their interest rates set at either the RPI in March, or the Bank of England`s base rate plus 1% - whichever is lower.

The news comes after last year`s student loans crisis - when students faced long delays in receiving the funding they had applied for.

Tags: loans, student loans, student loan, interest, interest on student loans, student loan interest, RPI, 1998

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