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Student Loans

(12 Posts)
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Gmajen Sat 27-Oct-12 12:44:18

At last, in the Times today there is a letter with a breakdown of the real cost over a lifetime of a student loan, including the interest payable on it. Nowhere else have I been able to find out these facts. They make astonishing reading. I quote -
'The loan carries an interest rate of RPI for the full 30 years; RPI plus 3 per cent is charged from when you first take out the loan until the April after you graduate; once you earn £21000 there is a scaled additional interest rate of up to 3per cent. Assumimg a tuition loan of £9000 p.a. plus a maintenance loan of £3575 and a 6.6 per cent rate charge this academic year and an assumed 5.6per cent for the remaining years, the loan value in April 2016 would be £37,725. The debt would be £44,221 as £6,496 interest will have accrued.
Annualise this over 30 years the figures are frightening.' -
When the former student earns £25000, repayments begin at £30 a month - £360 p.a. This will not even cover the interest payments!
My thanks to Susan Simnett of London for highlighting this problem

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sussim Tue 27-Nov-12 17:04:32

Hiya - I've just come across your reference to my letter in The Times. So glad it was useful for you. All the information is available here https://www.gov.uk/student-finance but you do have to dig deep to find it. It is all so well disguised behind the PR story that it's a good dealfor all. It is hugely expensive and, in my experience, very few parents and students understand what they are signing up for. Hence my letter.

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FlicketyB Wed 28-Nov-12 09:46:38

Another financial scam like pay day loans.

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vampirequeen Wed 28-Nov-12 09:53:40

Nine years ago I borrowed £6000 from Student Loans when I was doing my teacher training. Although I've been paying it back for several years I still owe over £4000. When I stop being paid in December no further payments will be sent to Student Loans. After that although I don't have to pay anything the interest will accumulate and before you know it I'll owe the £6000 and more. A student loan never goes away.

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marchorne01 Mon 22-Apr-13 12:10:17

Message deleted by Gransnet for breaking our Talk Guidelines. Replies may also be deleted.

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Elegran Mon 22-Apr-13 12:36:21

More advertising. Reported.

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annodomini Mon 22-Apr-13 12:38:00

This sounds like payday loans to me. Reported.

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cathy Mon 22-Apr-13 12:49:47

Oh I forwarded this to my son!!! is it some kind of a scam then

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annodomini Mon 22-Apr-13 13:00:49

These short-term loans usually have prohibitive interest rates unless they are paid off as soon as the borrower's wages come in which, of course leaves him/her short of cash again and it's a vicious circle. The clue here is that they don't do a credit check.

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annodomini Mon 22-Apr-13 13:04:51

Info here. Money saving expert is useful for all of this sort of thing.

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Elegran Mon 22-Apr-13 13:50:35

Cathy If they will lend to anyone without a credit check, then you can be sure that their charges are sky-high so that THEY don't lose out if anyone defaults. Not that that will stop them hounding the people who were so desperate for cash that they took on a loan at any price and then could not pay it back. The interest then piles up until they can never repay.

They have people over a barrel - no prospects of money so they can't get a bank loan, no money so can't afford to pay back the loan, so borrow more to pay the interest . . .

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Elegran Mon 22-Apr-13 13:55:10

Cathy If your son needs a loan, tell him to look for a credit union in his area, and to ask a lot of questions about how much it will really cost him to borrow. Read about it here -

Citizens Advice Bureau - about Credit Unions

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