Changes to Interest Rates and Thresholds

Changes to Interest Rates and Thresholds

11 August 2014

Changes to Interest Rates and Thresholds

BIS today (11th August) announced changes to the Interest Rates and Thresholds of Income Contingent Student Loans and Mortgage Style Student Loans.

Income Contingent Student Loans for pre 2012 loans

From 1 September 2014, until further notice, the interest rate set for the existing Income Contingent Repayment Loans will be 1.5%.

From 1 September 2014 until 31 August 2015, the interest rate for the Plan 1 Income Contingent Repayment Loans will be the lower of the Retail Prices Index in March 2014, or 1% above the highest base rate of a nominated group of banks. As the RPI for March 2014 was 2.5%, the maximum rate of interest you will be charged between 1 September 2014 and 31 August 2015 is 2.5%. However, due to the low interest rate cap, the rate from 1 September 2014 will be 1.5% until further notice, but that rate may vary if the bank base rate is increased or decreased.

Income Contingent Student Loans for post 2012 loans

The basic RPI rate for post-2012 loans will be 2.5%. So RPI+ 3% will be 5.5%.

Mortgage Style Student Loans

The interest rates and deferment threshold for Mortgage Style Loans, from 1 September 2014 to 31 August 2015:

  • the interest rate for mortgage-style loans will be 2.5%;
  • the deferment threshold for mortgage-style loans will be £26,727.

Those with mortgage style student loans queries should contact their loan administrator.


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