By Student loan interest set to rise to 12%
In England, students and graduates will pay up to 12% on loans this Autumn, the Institute for Fiscal Studies (IFS) said.
According to the IFS, a rollercoaster of varying interest rates awaits those looking to pay back their loans.
However, the long-term impact for student loan repayments will not be substantial.
For example, the rate will again move in March of 2023, taking a slight dip after the cap on interest kicks in.
From 2023, students starting their degree courses will have a fixed interest rate at a lower level.
Currently, university students in England calculate their loans by adding 3% to the retail price index (RPI) measure of inflation.
This figure factors in the change in a person’s monetary claims throughout their degree, such as student housing.
The BBC said many students are unaware they are being charged interest until they receive their first statement, the year after they leave university.
After graduation, students will pay up to RPI+3% until the loan is paid off. The amount that students pay back is based off their earnings.
The new RPI figure for the upcoming academic year has increased from 4.5% to 12%, from September 2022.
This is now the highest rate since tuition fees for university students increased to £9,000 in 2012.
In 2017, a political debate had been ignited that discussed whether the educational system felt fair, following interest rates rising over 6%.
The announcement is an unwelcome notion for many, given the cost of living crisis plaguing hard working families across the UK.
Recently, the BBC broke the news that the UK’s inflation has just reached 7%, the highest seen for 30 years.
Family budgets are already being tightened after purchasing daily necessities. Now graduates are facing more uncertain times.
