Wealthy students avoid £6K in loan interest by paying fees upfront
Students from the wealthiest families can avoid paying 6.3% in interest on student loans, by paying upfront, according to brand-new research by the Intergenerational Foundation
Unlike their peers, these 110,000 students avoid around £6,000 interest.
Wealthier families have realised that they can give their children a get-out-of-jail-free card by helping them to escape sky-high interest rates
Furthermore, the interest is charged from the moment students start university and sits at more than four times the Government’s borrowing rate of 1.5%.
The report states: “Neither will these students have 9% of income over £25,000 a year for the next 30 years deducted from their pay packets. This puts self-funders at a serious economic advantage to fellow graduates in terms of saving power, spending power, and the ability to borrow to buy a home for many years after university.”
Report author Rakib Ehsan states: “Wealthier families have realised that they can give their children a get-out-of-jail-free card by helping them to escape sky-high interest rates and a 30-year loan that could be sold off to the private sector in the future.”
President of the National Union of Students Shakira Martin commented: “This report is more evidence that the current system is not fit for purpose. While wealthy students can avoid accruing debt and the high interest which comes with student loans, too many students from low-income families grapple with a cost-of-living crisis and unaffordable housing. Wealthy students can focus on their studies, while too many poorer students work long hours to make ends meet.”
Read the full report at www.if.org.uk