Bad news for people with Student Loans

[Gfamily]

'Low earners'' interest rate for Student Loans to increase from 1.5% to 9% for 6 months because of inflation.
For people earning over about £50K it'll increase from 4.5% to an eye watering 12%

Then, because of a combination of inflation and a 'cap' it'll vary between 0% and 9% for the next couple of years.

https://ifs.org.uk/publications/16024

[IvanV]

'Low earners'' interest rate for Student Loans to increase from 1.5% to 9% for 6 months because of inflation.
For people earning over about £50K it'll increase from 4.5% to an eye watering 12%

Then, because of a combination of inflation and a 'cap' it'll vary between 0% and 9% for the next couple of years.

https://ifs.org.uk/publications/16024

Meanwhile, out in the real world, "real interest rates" (ie market interest rate minus inflation rate) are negative, very negative, because market interest rates are a lot less than the inflation rate.

But the government gets to set a positive real interest rate for student loans, regardless of the actual market interest rate.

I suppose you could argue that student loans are really a taxation/redistribution instrument, and so actual market interest rates are irrelevant. The government could have chosen to relieve the pain of current economic circumstances on lower income people, but it has chosen not to.

[Little waster]

Oh well the good news is at least energy prices and taxes are low at the moment so we all have copious amounts of free cash just lying around everywhere.

[snoozeofreason]

As the IFS document suggests, it's unlikely that the interest rate rise will result in HMRC recouping any more money from students than they otherwise would. All that will happen is that the total amount of debt that has to be written off will increase. It'll probably put prospective students off applying for university though.

[Bird on a Fire]

Interestingly SLC have yet to tell me this.

I'm not too bothered, as I'm very unlikely to ever earn enough to pay it all back before it gets written off, so it just sits there growing like a bad joke. I think I've repaid about 50p since 2014.