Students in line for loan rate shock

It has been claimed that many students that are studying at university in the UK could be set to face a loan rate shock, with interest rates on student loans set to increase as a result of the rise in inflation levels. Students already face a tough time when it comes to being able to afford everything they need whilst studying at university, but if interest rates do increase the situation could get even worse for many of those studying in the UK.

This week it was reported that the level of inflation had increased to 3.4 percent, which is 1.4 percent higher than the government’s target of 2 percent. The increase in inflation was said to have been driven by price increases on things such as petrol, food, and energy compared to last year when prices on these products and services were falling.

The interest rates on student loans are increased by the Student Loans Company each September based on the level of RPI inflation seen in March of that same year. According to reports around three million students as well as graduates could see their rate of interest increase when September comes around. The rate of interest that students are paying on loans can vary based on when the loan was taken out.

In addition to facing increased interest rates on loans students are also up in arms about the lack of clarity over student funding and university fees from the three main political parties in the run up to the general election. Student unions have accused parties of failing to provide clarity over these issues and hiding behind a review that was carried out last year in order to avoid having to go into too much detail about their policies with regards to this matter.

Tags: education, interest, Student loan, government's target, finance, Monetary policy, main political parties, time

Brits ‘failing to save for old age’

Britons are not making adequate savings for their retirement, an expert has warned.

Donna Bradshaw, a financial planning strategist with IFG Financial Services, a firm of independent financial advisers, stated that people in Britain are simply not saving enough money.

This could be partly down to house prices, she continued.

Britons have developed a “national obsession” with property which has skewed people’s focus from saving for their retirement, Ms Bradshaw asserted.

“Over the years we’ve made pensions unattractive with maybe too much legislation but we need to focus people through an education process,” she added.

However, Britons are making some savings; figures released by the Building Societies Association show that during April, such financial institutions received record savings inflow of £1.8 billion.

Adrian Coles, director-general of the body, remarked that savers are increasingly aware that building societies offer good accounts for savers during such “uncertain economic times”.

Tags: Association, enough money, financial planning strategist, Brits, education, GBP, money, billion.adrian coles

Money education ‘needed to reduce debt’

More education on money management and borrowing is required to help young adults in the UK avoid getting into debt, it is claimed.

According to Credit Action deputy manager Chris Tapp, Britons need more advice on the pitfalls of building up debt but stops short of calling for increased regulation on financial lending.

Too many Britons have “been educated into debt but not about debt”, he believes, calling for better advice to be provided by the government through the education system.

Sufficiently knowledge on the risks involved should be enough to help the UK’s younger adults to think more carefully about their financial management, Mr Tapp added, while the recent credit crunch, although not a good thing, could have provided a necessary wake up call to prompt people to think seriously about their money.

He concluded: “If people were better educated to the risks and people were able to manage their money more carefully … that would be more effective than further regulation.”

The National Union of Students has recently speculated that graduate debt in the UK could rise to £33,708 by 2011 because of the impact of top-up fees and recent increases to the cost of living.

Tags: financial management, lending, education, government, United States public debt

Students should take out content insurance, expert says

Britain’s students were strongly advised today to take out contents insurance on their possessions.

Cooper Healey, who runs Manchester Student Homes – a provider of private sector student accommodation – said that the insurance was important as protection against possible theft.

“There is a chance that you will become a victim of crime,” he said.

Mr Healey added, however, that there was “safety in numbers” in halls of residence “to some extent.

“The fact that [students] are often surrounded by CCTV which acts as a deterrent,” Mr Healey said. “Often they have 24-hour staff on site or otherwise they have a security patrol and security numbers so that does make parents feel very safe about where their child is going to be living.”

There is an increasingly unfavourable financial climate for students to take out perceived “non-essential” cover, however.

Not only are student loans on the rise – which have hit £20,000 for some university entrants this year – but rent is increasing, as well.

In a recent survey by the National Union of Students (NUS), rent was found to have increased by £19 per week on average in the last three years.

Tags: safety in numbers, sector, fact, education, victim of crime, student loans

Students given warning on credit cards

As thoughts begin to turn towards the new academic year, British students were advised by experts at Barclaycard yesterday that, while credit cards can be a good way of managing finances if used wisely, they can also drive up debt.

Students’ attention was also drawn to the relatively high rates of repayment demanded by card lenders in the UK.

The lender gave the advice at its new student website, which advises customers to shop around for the cheapest credit deal.

Barclaycard’s managing director of UK cards, Amer Sajed, said of the site launch: “Cards can be a lifeline for students managing a tight budget. They can help make the most of your time at university and establish a credit record for the future, but only if they are used sensibly.

“Our new site includes some blunt advice to help our customers make the most of the benefits and avoid the pitfalls.”

Tags: cheapest credit deal, british students, future, education, university, Credit Cards, managing director of UK cards, good way

Gay applicants “fairly treated” by life insurers, says ABI

The infamous ‘gay question’ during life insurance applications is no more, the Association of British Insurers (ABI) reassured consumers today.

Whereas previously, applicants had been asked point-blank to specify their sexuality, the ABI has moved to confirm that, under a statement of best practice implemented in 2005, a more non-specific question regarding HIV status is asked.

Claimants are also reassured that any past negative tests they might have taken will have no bearing on their life insurance.

A spokesperson for the association said that “it’s possible that there has been a perception that applications were not treated in the same way in the past, but now no longer do people have to disclose…what their sexuality is.”

“There is government legislation now which means that you don’t have to disclose whether you’re in a civil partnership, so there can be no way that the insurance company knows what your sexuality is.”

Many gay men had felt unfairly treated by the question, which implied that their sexuality posed an inherent insurance risk, providing the impetus for the reform.

Tags: past, perception, question regarding hiv, risk, life, Association of British Insurers, education, question

Debt considered acceptable because of student loans

According to a recent report the popularity of student loans has made debt in the UK seem even more acceptable.

According to the financial education charity Credit Action student loans have become such a norm that being in debt has become something of a fact of life. And according to officials from Credit Action these student loans have nothing to do with a need for money, but more to do with the easy access to student loans.

One official from Credit Action described student loans as ‘government endorsed debt on a massive scale’. Of course, students can find themselves in need of financial aid at some point during their education, but the easy access to student loans has resulted in many students just taking out loans for the sake of it rather than through real need, placing them on a downward debt spiral that could lead to problems later in life.

According to Chris Tapp from Credit Action there is not enough caution exercised with student loans, and the easy access to this type of finance has made debt appear to be acceptable even for the younger generation. With consumers levels in the UK at sky high levels this has raised concern amongst some charities and campaign groups, as those in their late teens and early twenties begin a debt ridden life before they have even completed their education.

According to Mr Tapp student loans enable students to live lifestyles that are beyond their means – something that they then become used to, and something that many have to continue funding through further finance, as their initial jobs after leaving college or university is unlikely to be a high paying one.

Tom Smith
17th June 2007

Tags: education, Loans, action, cheap, money, cash, rate, student