BBC NEWS | Student Loan INTEREST RATE TO RISE TO 12 PERCENT Due To Inflation

Student Loan Interest rates are expected to rise to 12% for the 6 months period from September 2022 to February 2023 due to the increase in the Retail Price Index (RPI) to 9%. I spoke to BBC News yesterday about what this means for students and graduates. More info below. Thoughts?

★★ FURTHER EXPLANATION ON THE 12% STUDENT LOAN RATE ★★

◼️ The increase in student loan interest rates applies to students and graduates in England and Wales
◼️ The increase will also affect post-grad students whose interest is calculated based on RPI + 3%
◼️ The latest RPI rates were published on the 13th of April 2022 re March 2022 and the current RPI rate is 9%
◼️ The 12% rate mentioned applies to those on Plan 2 loans with their interest rate calculated as RPI + 3%. That rate of 12% will apply from September 2022 to February 2023. After that, the rate is expected to drop as the interest rate cap will apply.
◼️ Note that not everyone will incur interest at 12%. See more below
◼️ DURING STUDY – Interest is charged at RPI + 3%. Previously you would have had interest charged at 4.5%. From September 2022, it will jump to 12% for 6 months.
◼️ AFTER GRADUATING – Interest is charged depending on what you earn. If you earn below the repayment threshold of £27,295, you pay interest at RPI (expected to be 9% in September). If you earn between £27,295 and £49,130, you’ll pay interest based on a sliding scale of between 9% and 12%. If you’re a high earner and earn above £49,130, you’ll be charged interest at 12% from September (i.e. RPI + 3%)
◼️ Those on higher incomes are most likely to be affected by this in the future.

Institute of Fiscal Studies analysis of this: https://ifs.org.uk/publications/16024

Full credit to BBC News for this clip. Watch the full episode here on “The Context” with Christian Fraser:

https://www.bbc.co.uk/iplayer/episode/m0016gk2/the-context-with-christian-fraser-13042022

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BBC NEWS | Student Loan INTEREST RATE TO RISE TO 12 PERCENT Due To Inflation

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