Personal Finance

Student Loans

My son got his student loan statement today. He graduated last year but already his loan has accrued over £50 a month interest. He's unlikely to earn over £15000 this year so will not start paying anything back from his pay. What is the best way of stopping the interest mounting up? His overall debt is £14700 at the moment. Is there a cheaper way of going about this rather than letting it sit there gaining interest every month? (Apart from the obvious option of paying it back which is not possible)

Pesk Mon 19/05/08 13:06

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joannie10
Mon 19/05/08
13:14

could he affort to pay anything back? although they wont start collecting the money if he is not earing enough he can still make voluntary payments which brings the balance down. My understanding is you wont find any loan with a cheaper interest rate.

Pesk
Mon 19/05/08
13:18

Question Author

Thanks - he's a struggling actor so has no surplus income at the moment. I suppose he needs his big break sooner rather than later!

buildersmate
Mon 19/05/08
15:47

What Joannie says is correct, because the interest rate charged on a student loan is equal to the inflation rate. I don't know what the Government reckons this figure is right now - probably around 3%. You won't be able to get a loan as low as this.

Pesk
Tue 20/05/08
11:17

Question Author

Thanks for your replies. THe interst rate is 4.8% at the moment. They sneakily put it up last summer without telling anyone! I shall have to get my son to pay it off as soon as he can.

buildersmate
Tue 20/05/08
11:44

Did they indeed. So they lied about earlier statements, because inflation is not 4.8% - according to Alistair with the strange-coloured eyebrows.

factor30
Tue 20/05/08
23:34

There are of course several measures of inflation, the main ones being RPI and CPI; and the government then uses which ever measure suits them best. In this case they chose to use the higher figure.

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