University fee debt fears - NUS Liam Burns says the debt is like a small mortgage (uk)

Repayment of student loans - Interest is charged at the rate of inflation plus three per cent while you study. The amount you owe will increase each year with interest.

You are liable to repay your loan in the April which falls three years after the start your course, even if you are still studying. But you will only make repayments if you are earning over £21,000.

Once you earn over £21,000, you pay nine per cent of your income above £21,000. So if your salary is £25,000, you pay nine per cent of £4,000 which is £30 a month.

If your repayments don't start because you're earning under £21,000 the interest on your loan will increase at the rate of inflation.

Repayments are normally taken automatically from your salary.

If you haven't paid off the loan after 30 years, your loan will be written off.

http://www.direct.gov.uk/en/EducationAndLearning/UniversityAndHigherEducation... (See - 'Repayment of student loans' at end of page.)
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What is the long-term cost?

The Institute for Fiscal Studies says that, for about half of graduates, the plan is essentially a 9% graduate tax for 30 years, because they will not finish paying off the debt by the 30-year cut-off point.

Assuming fees of £7,500 for a three year degree, plus maintenance loans, its modelling shows that the top 10% of graduate earners will clear their debts, on average, in about 15 years. But a middle-earning graduate would need to earn, for example, an average of £48,850 a year for 26 years to pay off their debt.

http://www.bbc.co.uk/news/education-11483638
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How student loan repayments are worked out (courses starting from 1998)

http://www.direct.gov.uk/en/EducationAndLearning/UniversityAndHigherEducation...
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Early repayments on New student loans from 2012 could be cancelled out by interest.

Interest rates will range from 1.5% to 3.0%, but could go higher.

Therefore, a loan of £27,000 @1.5% interest, would require repayments of £37.50 a month, just to pay the interest.

Category:

News & Politics

Tags:

• University fees
• tuition fees
• Repayment of student loans
• student loans interest

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Early repayments on New student loans from 2012 could be cancelled out by interest.

Interest rates will range from 1.5% to 3.0%, but could go higher.

Therefore, a loan of £27,000 @1.5% interest, would require repayments of £37.50 a month, just to pay the interest.