According to the Student Loan Company (SLC), student loan interest rates are “based on the annual March Retail Price Index (RPI) or the highest base rate of a number of major banks plus 1; whichever is lower”. Students who started courses pre-1998 are slightly different, but still benefit as they have a fixed term loan on which interest is charged based on the same rate of RPI (ignoring the bank rates).
So, as RPI has fallen to negative 0.4% in March, interest rates on student loans should also fall in line to -0.4% for all students (assuming the Bank of England [BoE] Base Rate remains positive).
Has this happened?
So far, yes. Action has previously been taken in light of BoE Base Rate changes, with the Student Loans Company reducing the interest rate payable on loans to 1.5% (Base Rate plus 1%) following the latest drop in the Bank of England rate to 0.5% on Thursday 5th March. This has been effective since 6th March 2009.
However, with the new RPI figures published this week, this is no longer the case, and rates must be adjusted again.
Conservative Future will continue to monitor the SLC, to ensure interest rates are set at appropriate levels, in line with contractual obligations between graduates and the SLC.
However, with the new RPI figures published this week, this is no longer the case, and rates must be adjusted again.
Conservative Future will continue to monitor the SLC, to ensure interest rates are set at appropriate levels, in line with contractual obligations between graduates and the SLC.
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