Understanding student loan interest 2019/20

Students have to pay interest on any student loans they borrow. They’ll be charged interest from the day we make their first payment to them or to their uni or college until their loan has been repaid in full or cancelled. The amount they’re charged is based on the Retail Price Index, or RPI. RPI measures inflation, which shows how prices change over time. So if inflation is 5%, a burger that costs £5 this year year will cost £5.25 next year. While they’re studying, they’ll be charged RPI plus 3%. From the April after they finish or leave their course, how much interest they’re charged will depend on their income. But the important thing to remember is that the amount of interest they’re charged doesn’t affect how much they’ll repay each month.

Paul Whisler

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