I believe its a disgrace for labour to of put student loan rates up to 5%, orginally students such as myself agreed to take a loan out on agreement that interest was that of inflation (resulting in a 0% increase compared to income) for them to bring in new legislation to start making me pay interest on my already 11k loan at 5% is ludicrous and makes it even harder for first time buyers such as myself to settle down financially. Over the period of time it takes to pay off the student loan they would have made a substancial amount of money (not surprising there for labour)
also people that are financially less fortunate get out larger loans now they have to pay back even more even though they started off with less, wheres the dignity in that
I think that interest should be charged on a student loan, and that 4% or 5% is quite fair. This is still a far better rate than is available (long term) from any other source (the cheapest rate I found for myself was 6.9%, but I can take an advance on my credit cards short term for 0%, paying a 3% charge). What is unfair is if the increased rate is charged retrospectively, and I am unsure of the legality of this, but if I had signed an agreement at a low rate i would refuse to pay an increase (likewise if I take out a fixed term loan at a higher rate, I would not expect this rate to be lowered if interest rates changed - just my bad luck!). I also thought that you only had to start your repayments once your employment salary was in excess of £15k per annum, and then repayment was on a sliding scale as an affordable per centage of your salary. I wish I could get a loan under these conditions!
Unfortunately a lot of students no longer use their loans for the original purpose that they were created which was for books, course fees and covering basic cost of living which means students are borrowing more for cars, laptops, holidays etc. I think that the huge increase in the size of student loans means that there are lot more than don't get paid back due to students scarpering and that has a cost associated with it. I don't think 5% is at all unreasonable as Cliver says you cannot get that interest rate anywhere else so it is discounted finance and unfortunately if it was made any cheaper then it would have to come out of the governments pocket which would mean that some other tax or charge would go up. I think unfortunately its one of those things like council tax that will always increase and not necessarily in line with CPI and because you don't have any other chooses so are over a barrel and have to use it they will continue to operate it like this.
I think that it is right for rates to go up of student loans as a lot of students do use their loans for cars, etc which iosn't what theyare for,it should be if you use your loan for the proper items you should buy then the rates stay low but if you abuse the situation and buy cars and holidays as some do,maybe a small percentage only but then their rate should go up as they are not using it for the proper item
Education