True cost of University in 2012 £9,594
A large number of students starting university this year will have to pay a sizable 6.6% interest on their £9,000 loan whilst in their first year.
This follows the annual announcement by the SLC regarding the rate of inflation that will be used for the upcoming year as 3.6%.
This is in addition to the 3% interest rate that new students will have to pay under the new student finance system which comes into effect this year.
The result of 6.6% on a £9,000 student loan is an extra £594 a year.
Under the previous system, students are only charged interest at the rate of inflation (measured by the retail price index - RPI). The calculation here is a 3.6% increase on a value of £3,375, which equals £121.50.
Students paying the full £9,000 in tuition fees from 2012 will incur an additional £472.50 when compared with last year's applicants, and that is not taking into consideration the maintenance loan.
To put it simply, under the new 2012 system students will not only be paying an extra 3% interest on top RPI but they will also be paying this interest on tuition fees of almost 3 times as much.
It won't affect some
However, it is also worth bearing in mind that many will never end up paying back their total student loan before the 30 year period (when the debt is wiped). That makes the extra interest almost irrelevant in some cases.
Also, under the new system you do not pay back anything you earn under £21,000 as opposed to £15,000+ (changing under RPI each year) under the old one. For lots more information see our full student finance guide.
Will it affect you?
If you are heading to university or know somebody who is, or simply just want to find out more then have a go at our student loan repayment calculator where you can compare the old student finance system with the new one to see how long it will take you to pay back your loan and the amount you will have to pay back.