September is just beginning and as the last memories of summer are blowing away in the autumn breeze, everyone is facing forward to the academic session about to begin. If you are considering taking out a loan to cover your tuition or perhaps just your maintenance fees, then you would probably be interested in finding out what the possible interests will be for your loan. This post is about the different interest rates found on student loans in the UK and how you can maximize that knowledge to get the best deals.
First of all, where to apply?
Applying for loans is largely dependent on your location. If you are located in Wales or England, you should apply to the Student Loan Company, North Ireland students apply to the Education and Library Board, while Scotland students apply to the Student Awards Agency. Your application form will include details of your passport, (including passport number and validity dates), your national insurance number, the course you are studying (may include name and location of institution) and your bank account details and sort code. After providing these details, approved applications are replied with an entitlement letter and further details on how to receive the money.
Interests on student loans are non-negotiable, however they are only required to be paid when the student has finished with the college or school being applied to, and only if the student has an income of up to GBP 21,000.
There are different interest rates applied to student loans, for both undergraduates and postgraduate student loans.
Interests on these loans are largely dependent on the repayment plan type selected by the student.
- Income contingent repayment loan
Interests on this loan, according to the Student Loan Company is 0.9%. This applies to student loans in Scotland and Northern Ireland (or carried out before 1 September, 2012 in England and Wales).
- Income contingent repayment loan from 2012
For loans carried out after 2012 in England or Wales, the interest rate depends on varying circumstances:
- While studying and until the April after leaving the course the rate is 3.9%
- From April 6, after leaving the course till the loan is finally repaid, the rate is variable depending on the income of the student. That is, it is 0.9% where the annual income is below GBP 21,000 and can be up to 3.9% as the income increases to GBP 41,000 and more.
- Failure to respond to Student Loan Company requests for information, which results in an addition of 3% interest irrespective of salary/income standard, until the information is provided.
Postgraduate students taking out loans for Master’s degrees on or after August, 2016 are required to follow an interest rate of 3.9% on the principal. However, unlike the undergraduate loans, that figure is largely dependent on the Retail Price Index (RPI) and can be changed every September. The RPI figure is 0.9% till 31st August, 2016, though it has held at the same rate for two years going.