Student Loan Rates To Be Unaffected By Sale Of Loan Book

Fri, 16 Oct 2009

Students across the UK will not be affected by the planned sale of the student loan book, according to the Government.

Earlier this week, Prime Minister Gordon Brown announced plans to sell the loan book as well as other Government assets in a bid to reduce the nation’s huge debt pile by £16 billion, raising fears a private buyer could increase interest rates on student loans to boost profit.

But The Department for Business, Innovation and Skills (BIS) has confirmed that if the student loan portfolio is sold to a private company, the loan rates "would still be administered by the Government".

Under current rules, student loan rates are adjusted for each academic year in line with the Retail Prices Index (RPI) rate of inflation.

Because the RPI has been negative for most of the year, borrowers who took out a loan before 1998 currently pay a rate of minus 0.4 per cent, which means they are actually earning interest on their loans .

All other borrowers currently benefit from a 0 per cent loan rate .
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