Students: Finance

Innovation, Universities and Skills written question – answered on 15th January 2009.

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Photo of David Willetts David Willetts Shadow Minister (Education)

To ask the Secretary of State for Innovation, Universities and Skills what procedures are in place for informing (a) students and (b) recent graduates about the change to student loan interest rates implemented on 5 December 2008.

Photo of David Lammy David Lammy Minister of State (Department for Innovation, Universities and Skills) (Higher Education & Intellectual Property)

The Student Loans Company (SLC) published details on the change to student loan interest rates implemented on 5 December 2008 on their website and in national newspapers. Borrowers receive details of new interest rates in their statement each year from the SLC. Information on the interest rate change was also published on the Directgov website.

Following the latest reduction in the Bank of England base rate by the Monetary Policy Committee on 8 January 2009, all the specified banks(1) have now reduced their base rates to 1.5 per cent. The SLC has therefore now reduced the interest rate for income contingent loans from 3 per cent. to 2.5 per cent. with effect from 9 January 2009 until further notice. The SLC has accordingly published this information on their website and in national newspapers.

The interest rate for loans taken out before 1998 (known as "mortgage style loans") is not affected as these loans are governed by different legislation.

(1)Bank of England; Bank of Scotland; Barclays Bank PLC; Clydesdale Bank PLC; Co-operative Bank PLC; Coutts & Co; HSBC Bank PLC; Lloyds TSB Bank PLC; Natwest Bank PLC; the Royal Bank of Scotland PLC.

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