Lakhs of students are being impacted by rising interest rates on their loans, adding to the amount they have to pay to repay the loan.
student loan interest The rates are likely to increase by about 3 per cent from September, the government has announced.
Rates have risen from 4.5% to 7.3%, which means it can take years to repay the loan.
But there were fears that the new rate would be even higher.
Since the interest rate is linked to inflation, it was expected to reach 12%.
But the education department went ahead with its announcement, saying it was protecting graduates from rising inflation.
The recently announced changes will affect current students as well as outstanding students in England and Wales Loan Those who started university in or after 2012.
Who will be affected?
The change will not affect borrowers’ monthly repayments because it is how much you earn, not interest on the loan.
If you are not making money, or are earning less than your loan limit, you do not need to pay anything back.
We’ve seen before when you start pay off your student loan And what is the interest rate.
Since more interest is accruing on the loan, this could mean that the loan takes longer to pay off and the total amount you pay is higher.
However, student loans are wiped out 30 years after you leave university and many people will not finish paying off the loan before that point.
write on money saving specialistMartin Lewis said a major problem for students is the frozen repayment limit, which adds to the loan cost, and the maintenance loan increases to cover the cost of living.
When do I start paying off my student loan?
You are eligible to start paying off your student loans in April after you leave university.
However, every year thousands of people accidentally start repaying their loans.
The amount you pay every month depends on your income and also the plan you are on.
English and Welsh students and Scottish or Northern Irish students who started undergraduate courses before 1 September 2012 are on Plan 1.
England and Welsh students starting undergraduate courses after 1 September 2012 are on Plan 2.
Plan 1 students start paying 9% of their income when they earn more than £19,895 – and plan 2. for £27,295,
It also differs when your loan is written off. For those who started higher education after 2012, it has been 30 years since April 1st since you graduated.
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