Indebted students wont benefit from interest rate changes to their loans

11 September 2017

Indebted students wont benefit from interest rate changes to their loans

Why interest rate changes to student loans don’t make financial sense for the bulk of indebted students.

Why interest rate changes to student loans don’t make financial sense for the bulk of indebted students.

It is suggested that the Government are looking at reducing the interest rate charged on the debt accrued by students at Universities (http://www.telegraph.co.uk/news/2017/09/09/tories-plot-slash-student-loan-rates-attempt-court-young-voters).  This is specifically the loan element that covers the Undergraduate Fee for home and EU students.  Whilst this interest rate (6.1%) is high when compared to other long-term loan products such as mortgages (best buys currently are anything between 1.5 and 3% per annum depending on deposit size) and could be revised downwards for market parity –  It is actually a smoke screen from the actual repayment reality for students and demonstrates either a deliberate or misconceived understanding of loan financing.

The only thing which would make a difference to the majority of students is a reduction in the fee payable on the loan, or an increase in the threshold – but neither of these options seem to be under discussion.

For more please see the full article on the ICMA Centre website.

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