h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

yay! your first day sounds like it was pretty ok there hon...

-Pete

Bah, silly random capitalisation.

thanks hun

^. .^
= ' =
Guru
CommunityArtist

it was more like you hid behind dawn untill he finished taking to her.

Just popping in from my hols to drop in a couple of words about student loans - a lot of my friends have got their knickers in a twist about this student loan interest rate rise, claiming some evil government plot.

Much though I feel this government has let us down on a variety of issues it's not their fault this time. Student loans aren't quite interest-free, but the rate of interest they charge is the rate of inflation - just so's however much they lend you is still worth the same amount in real terms when you pay it back. As the net interest rate anyone charges you for a loan is whatever rate of interest you're paying minus the rate of inflation, student loans are *effectively* interest-free.

The rise reflects the rise in the rate of inflation, that's all - it was very low last year, and for the last six months the rate of interest on student loans they set last August has only been about half the rate of inflation... meaning that in real terms, we've actually been receiving interest rather than being charged it.

But this interest rate rise is fine as long as your income is keeping up with inflation. Half my mates have trendy jobs in the media sector, which is generally non-unionised and is always ready to exploit the long queue of willing applicants ready to fill any vacancy - and they haven't had pay rises to reflect the rate of inflation, and have been whinging to anyone who'll listen. Me, I'm employed for a pittance by the BBC but I've got a union and everything so I've had a pay rise of about 3% so I don't mind. And they all earn more than me anyway, so stuff 'em!

Glad to hear college is going well, by the way, Em!

I'm very glad about that- assuming I haven't messed up my application for this year. which I may have done. Oops

I'm very glad about that- assuming I haven't messed up my application for this year. which I may have done. Oops

So that's why the interest has been raised to 3.1% from 1.3% which I do believe is above (not by much admittedly) the current rate of inflation of 2.9% (data as of July), it's to help cover the deficit of last year.

Mel

I think it was something like 3.2% for August, Mel, and that's when they set it. There's nothing they can do to fiddle the figures - they just have to take the RPI every August, and I suppose it comes out better for the students some year and better for the SLC in others.

I think the reason everyone's so freaked out by the rise is because it seems so huge, but that's only because the rate of inflation happened to be abnormally low last August (it was 2 point something the year before) and nobody really noticed that at the time. Well, certainly not me - I was out living and stuff at the time...

Well so long as the interest rate doesn't drop anymore there shouldn't be too much hassle!

If it drops another 0.25% though it will be below inflation I do believe, which is not good considering the amount of debt our society already takes for granted The government should be encouraging people to save a little more. (I know, they want us to spend spend spend. Damn them )

Mel