Student Loans – Money Clip Minute

– Student loan interest rates are set to rise by up to
75 percent in September, but why and who will it affect most? (gentle music) The student loan interest rate is based on the retail prices
index rate of inflation. This measures the cost of living in the UK. At the time of the March budget, the retail prices index is used to calculate the annual
student loan interest rates. It was 0.9 percent in March last year, but it was 1.6 percent at
the same time this year. So, because the retail price index went up and the student loan interest
rates are based on that, the rise shouldn’t be totally unexpected. But an increase of more than 75 percent will add a fair amount to
student loan repayments, and it may mean it will
take longer to pay off. The amount a graduate repays
will depend on their income, but these changes affect
higher earners than most. The students with say a 40,000 pound debt, the increased interest rate would mean an additional 280 pounds per year. Remember to seek financial advice when it comes to repayment so you pay at the optimal rate, and make sure you don’t pay over the odds. But, although the interest
rates are increasing, they’re still lower than
what you’d get for borrowing the same amount on the high street. That’s all for this week. If you want to find out more about the cost of being a student, click on the link. Or for more financial
news, tips and advice, don’t forget to subscribe.

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