Student loan interest rates fell in September, from 4.8% to 3.8% as reported here.
But now even more good news, student loans are again seeing another fall in interest from the 5th December. The new rate is 3%. Which should bring some welcome festive cheer to most students and those paying back their loan.
But why the sudden change?
The interest rate is usually set by the Retail Price Index figure for March, this then sets the rate from the September following. Alternatively, if lower, the rate is set from “the highest base rate of a number of major banks plus 1%”.
Usually RPI is lower. But due the current ‘credit crisis’, the Bank of England has been slashing the base rate. It currently stands at 2%. This has led to the interest rate on Student loans being reduced to 3% from the 5th December 2008.
So what does the future hold? Will rates go up or down?
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