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PostPosted: Fri May 11, 2012 8:39 am 
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Joined: Fri Nov 12, 2010 11:35 am
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Location: reading
I was shocked a couple of weeks ago when I spoke to student loans about a potential loan we would take out for my son (or rather that he would take out) for entry this October. I had to ask for the rate to be repeated 3 times, it is 3% above RPI ie inflation which is currently at 5.3%. So from day 1 of taking out the loan, which is split into 3 tranches per annum, you start to incur interest at a whopping 8.3%!! If you are just looking to borrow the £9k per annum, I have not done a detailed calculation, then you are looking at about £31k of capital to be repayed after 3 years. Then, the 3% comes off but the RPI is still applied going forwards. A lot cheaper to stick it on the mortgage if you can. Up until this september it has been the bank base rate, which is considerably lower that RPI. I was shocked as well when I told my son, who informed his teachers at school and they were not aware of the new rate. Incidentally, they had been advising children to take out maximum loan and invest in an ISA even if they did not need it!


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PostPosted: Fri May 11, 2012 9:03 am 
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Sure the problem with sticking it on the mortgage is that you will definitely have to pay it all back, but with a student loan if you don't earn enough then you won't.


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PostPosted: Fri May 11, 2012 9:09 am 
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Joined: Thu Dec 18, 2008 10:12 am
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Location: Berkshire
It's true that it is punitive, however I wouldn't recommend anyone increasing their mortgage to cover it, as you definitely have to repay your mortgage.

Your son or daughter might never repay their loan. There might be new rules in future about how it is to be repaid, it's not as black and white as it seems.

You may even find that graduate recruiters will offer to repay some or all of the fees if your child finds work with them, and if your child has time off to start/look after a family, then they wont be repaying then either.

I think they have been really quiet about the costs except to try and put a positive spin by showing you on the government website how little you have to repay :twisted:

ETA - SSM posted at the same time :D


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PostPosted: Fri May 11, 2012 9:16 am 
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Location: Berkshire
It's quite a hike in interest rates though - this for repaying loans from 2011 from the government website :-

Quote:
If you started a course before September 2012 interest rates vary because they’re linked to the rates charged by high street banks. For the year starting 1 September 2011 the rate is 1.5%.


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PostPosted: Fri May 11, 2012 9:19 am 
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It is definitely a hike but I suspect they think that very few will pay the lot off at any time.


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PostPosted: Fri May 11, 2012 9:21 am 
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Location: Berkshire
hermanmunster wrote:
It is definitely a hike but I suspect they think that very few will pay the lot off at any time.


So maybe they should have kept the fees at the same level and just raised the interest rate. :roll:


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PostPosted: Fri May 11, 2012 9:24 am 
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Looking for help wrote:
hermanmunster wrote:
It is definitely a hike but I suspect they think that very few will pay the lot off at any time.


So maybe they should have kept the fees at the same level and just raised the interest rate. :roll:


Agree - would have been much more honest solution - looks a bit like glorified monopoly at the moment..


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PostPosted: Fri May 11, 2012 9:33 am 
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Location: reading
I know that they do not have to repay until incomes reach a certain level but it's just the burden of it, accruing interest all the time. How will they ever get their foot on the property ladder?


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PostPosted: Fri May 11, 2012 7:28 pm 
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Joined: Sat Feb 25, 2006 1:21 am
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Looking for help wrote:
I think they have been really quiet about the costs except to try and put a positive spin by showing you on the government website how little you have to repay :twisted:



Don't get me started... :evil: :evil: :evil:

_________________
Marylou


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PostPosted: Fri May 18, 2012 5:32 pm 
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Joined: Thu Dec 18, 2008 10:12 am
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Location: Berkshire
Another interesting article

http://www.bbc.co.uk/news/education-18101729

I wonder why people are only thinking this now :shock:


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