Students in the United Kingdom who had taken out loans from The Student Loans Company will be facing a rate hike that has serious ramifications. Many of these borrowers were paying at or around 0% interest on their student loans. As of next month, they will be paying 1.5%. This is for post-1998 loans. For student loan taken out prior to that, borrowers will be paying 4.4% instead of -0.4%. Now that is a serious hike in interest!
How many people does this affect?
- Post-1998 Student Loans: 3 Million People
- Pre-1998 Student Loans: 350,000 People
For some borrowers, this means they may have to pay back as much as twice the amount per month. Many people taken out other debts such as student auto loans with a certain budget in mind. This kind of unexpected rate change can throw their financial situation haywire. Many press outlets are reporting on the response.