Student loans: How much is interest rising and how to check balance
The UK is facing a cost of living crisis, with the prices of many goods and services soaring – and with inflation rising to another 30-year high it doesn’t look as if it’s going to ease up any time soon.
Among those who are set to feel the pinch are students – who will be impacted by a huge rise in interest rates on student loans.
New analysis has shown that those who have taken these out in England since 2012 are particularly set to be impacted.
Just how much are these interest rates rising by – and how much more can students who have loans expect to pay?
How much is interest on student loans rising?
Interest on student loans is set to soar to as much as 12%, according to the Institute for Fiscal Studies (IFS).
The rise, which will kick in from September 2022, is a significant increase from the current interest rate of 4.5%.
It will apply until March 2023, when an interest cap will kick in, with the rate fixed at a lower level for those starting university that year – and will make rates the highest since 2012, when tuition fees were raised to £9,000.
How this is likely to impact students will vary.
A high-earning recent graduate, for example, on a salary of more than £49,130, with a loan balance of £50,000, is likely to have to repay an additional £3,000 in interest charges on that sum over six months.
Meanwhile, a lower-earning graduate – the threshold being below £27,295 for this – will be faced with interest rates spiking from 1.5% to 9%,
However, the IFS has said that the rate is likely to drop back to around 7% in March 2023 – which may not make a huge difference to how much students repay in the long-term, but could have a short-term effect on some would-be students who don’t understand the loan system.
‘The maximum rate will reach an eye-watering level of 12% between September 2022 and February 2023 and a low of around zero between September 2024 and March 2025,’ the IFS said.
‘There is no good economic reason for this. Interest rates on student loans should be low and stable, reflecting the government’s own cost of borrowing.’
How to check your student loan balance
You can check your student loan balance via the gov.uk website.
This also provides details of how much you can expect to pay – which will depend on which plan you are on.
There are a number of different student loan plans, each of which has a different income threshold. The gov.uk website has details of all of these, and what you can expect to pay depending on how much you earn.
You will not pay anything back if your income is under the threshold.
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