Our call centre had received quite a few calls from students following the
issue of the annual statement. The students stated that they were told by
"advisors" that the loan was interest free.
We felt that we should issue a general reminder just in case some staff
confirmed the loan was interest free. I would say that the majority of
institutions are aware that this is not the case.
I apologise if you felt that the note was heavy handed but it was never
intended in that manner.
<[log in to unmask] To: [log in to unmask]
Sent by: Subject: Re: INTEREST ON LOANS
Please respond to
Quite right too ! I thought that the original message was a little heavy
From: Neil Harrison [mailto:[log in to unmask]]
Sent: 21 November 2003 17:25
To: [log in to unmask]
Subject: Re: INTEREST ON LOANS
I don't know about colleagues at other institutions, but I
am more than slightly offended by this message.
My staff and I are more than well aware of the procedure by
which student loans operate. Given the countless
complaints that we receive from students concerning the
advice and service given by SLC staff, I think that there
is more than a whiff of kettles and black pots here.
Quoting the standard SLC response to anecdotal stories from
students, unless you are able to provide details of who
these students spoke to and when, I regret that we will be
unable to take your comments on board.
On Fri, 21 Nov 2003 17:16:24 +0000 Val Bryan
<[log in to unmask]> wrote:
> Dear Colleagues
> Following issue of Annual statements we have had feedback
> from various students claiming that HEI advisors have told
> them that student loans are "interest free".
> This is not the case although Student loans are not
> commercial loans interest is applied. The Government
> subsidises the actual cost of interest on the loans, so
> they do not attract the same rates of interest charged
> if as that from a bank or building society. However, to
> make sure that all borrowers effectively pay back the same
> amount that they borrowed, the Government has to keep the
> value of what is owed in line with the general rate of
> inflation. This is done by working out the rate of
> inflation each year as defined by the Retail Prices Index
> (RPI) and fixing the interest charged to that rate. This
> means that however long it takes to repay loan, in real
> terms no more will be paid back actually borrowed.
> Furthermore to protect the interests of borrowers, there is
> a limit to the rate of interest that can be charged. This
> will be equal to the bank base rate plus 1%. As the bank
> base rate moves up and down this could mean that, in
> certain circumstances, the rate of interest charged on
> student loans could change during the year. If, for
> example, the base rate plus 1% fell below the rate of
> interest being charged on student loans, the SLC
> would reduce the student loan rate to match it. Normally,
> however, the RPI is lower than the base rate plus 1%.
> From the moment a loan is paid and until paid off in full,
> interest will be charged on a daily basis. The interest
> will be 'compounded', that is, added to the total amount
> owed, every month.
> The RPI used is set annually before each new Academic Year
> and is based upon the percentage difference between the
> retail prices all items index published by the Office for
> National Statistics.
> That is why some documentation will not quote the actual
> specific rate applicable because at time of publishing this
> will not yet have been calculated. Websites and other
> documentation however do actually explain how interest is
> set and calculated.
> Once the RPI has been set and agreed we do publish this
> information. For example it is currently on the 'latest
> news' section on the SLC website.
> Also on Saturday 9/8/03 SLC placed a Notice in the
> following Newspapers advising of the interest rate change
> The Guardian
> The London Times
> The Independent
> The Glasgow Herald
> The Scotsman
> Sent on behalf
> Stephen Hainey MICM
> Student Support Liaison Manager
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Head of Student Advice & Welfare Services
University of the West of England
Frenchay Campus, Coldharbour Lane
Bristol, BS16 1QY
E-mail: [log in to unmask]
Tel : (0117) 344 2822
Fax : (0117) 344 2895
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