The headline interest rate on student loans has risen to 6.3%.
Latest figures show that rates on post-2012 student loans in England and Wales have risen again, with the new rates being introduced in September 2018.
Interest charged on student loans is updated each September based on the rate of RPI in March of the same year. The RPI rate of inflation has more than doubled from 1.6% in 2016, adding more interest to students’ loans.
The interest charged is set at 3% plus the Retail Prices Index (RPI) inflation rate, which climbed to 3.3% in March.
New starters and current students will be charged 6.3% on their loans from September, while graduates who enrolled after 2012 will be charged between 3.3% and 6.3%.
Those who started university between 1998 and 2011 will see no change to their interest rate of 1.5%, and those who started before 1998 will see their interest increase from 3.1% to 3.3%.
Currently, students who enrolled after 2012 have an interest rate of up to 6.1% on their loans, depending on how much they earn.
Graduates who are paid £25,000 or less will pay 3.3% under the new rate from September, while those earning £45,000 or more will be charged the full interest amount of RPI plus 3%, meaning an interest rate of 6.3%.
Save the Student says the increase in interest rates will come as a blow as the government has recently raised the student loan threshold from £21,000 to £25,000, saving graduates around £360 a year before this latest rate rise.
Jake Butler, money guru at Save the Student, says: “While the increase in interest is not as large a jump as we saw last year, it’s yet another increase on an already astronomical percentage.
“Having said that, it’s important to remember this will likely just add even more to the pot of student loan debt that they’ll end up never paying back.”