If you’ve recently packed a child off to university, you’ll be hoping you’ve done all you can to prepare them — financially as well as emotionally.
The university experience in England comes with a hefty bill. The average undergraduate degree now costs £27,750, and that number can easily double when factoring in the cost of living. However, a comprehensive student loan system means that most decide to go ahead and pay for the pleasure over the course of their professional lives.
The loan carries a significant long-term cost. It accrues interest from the day funds are received in the account, and graduates will repay 9 per cent of everything they earn over £27,295. The interest rate used is based on the retail prices index on September 1 each year. There have been interventions to ease this burden, including an announcement in August that the interest rate on student loans will be capped at 6.3 per cent, instead of the 12 per cent figure implied by RPI inflation.