Student Loans Interest Rates Go Up – Current and past students are facing a huge increase in rates on their current student loans, which include tuition fees and maintenance loans.
This rise will affect all current and past students in England and Wales. These rises in interest are linked to inflation and will go from 4.6% to 6.1%.
That is not all the bad news however for students in England. There is also set to be an increase in tuition fees and will increase to £9,250.
Retail Prices Index is the Reason
The reasons for the rate increase is due to the Retail Prices Index (RPI) increasing to 3.1% in March past. This is the highest it has risen in the past few years. This increase puts students under pressure before they even finish education.
When students finish their studies the interest rates will depend on the individual’s earnings. This rate of interest will now go up to 6.1% for an income of £41,000.
This increase is confined to students who studied and qualified after 2012. Anyone who studied or graduated before this will have no change in their rate.
Even before these changes have been made, currently any student that goes on to earn £41,000 they are likely to make repayments of £54,000 on fees, and this figure is only going to increase further.
On top of this amount of tuition fees, students during their university years will also rack up debts from just living, accommodation and any other costs related to living.
With all these associated costs The Intergenerational Foundation called this ‘The Packhorse Generation’ to symbolise the amount of debt a student will leave with from university.
On top of these changes the government is also in the process of selling off student loan debt that was occurred from 2002 and 2006. They are hoping this will raise approximately £12billion.
The amount of debt that students owe is continuing to increase. In 2011 the amount of debt owed was approximately £34 billion which rose to £76 billion last year.
With this amount of debt looming over a newly graduated student it can have a real effect on their prospects in the future. The thoughts of buying a new house and any future plans could be hindered by the ongoing debt that follow on after university.
In the US in New York it has been proposed that they plan to scrap all tuition fees for those attending any public universities and colleges for those households that earn up to £100,000 per year.
The new increase of rates in the UK is due to be confirmed in September.