Almost everything which is said officially about student finances is obfuscatory and contradictory, starting with Damian Green’s assertion at the weekend that we need ‘a national debate’ on tuition fees, only for former education secretary Michael Gove to say the opposite the following day.
A week before the General Election was called, the Student Loan Company announced that it was increasing interest rates from 4.9 percent to 6.1 percent, according to its formula of inflation plus 3 percent. Due to the effects of compound interest, that potentially takes the lifetime cost of a typical student’s debts from around £51,000 to £70,000, according to the calculator on the Money Saving Expert website. However, try finding accurate repayment numbers on an official site and you will be disappointed. Indeed, the internet is full of somewhat dubious calculators, many of them giving different answers.
The Student Loan Company has to charge such usurious interest rates because the levels of default rates and special deals – for example for the disabled and those earning below £21,000 – are so high.
Incredibly, the student loan system is apparently largely exempt from regulation from the Financial Conduct Authority, which is one reason why politicians make false and contradictory statements the whole time.
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