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Graduates hit with student loan rate increase

Published: Friday, 27 August 2010   Category: All Graduate job news

Graduates were dealt a blow yesterday (August 26th) after it emerged that the zero rate of interest on their student loans has been scrapped.

The Student Loans Company confirmed that for anyone who secured a loan after 1998 will be charged 1.5 per cent interest during the year to August 31st 2011.

Furthermore, the firm revealed that students who took out a loan prior to 1998 - believed to be about three million people - will be hit with an interest rate of 4.4 per cent.

The new rates, which are linked to the Bank of England base rate, will mean that £200 is added to the cost of a typical loan.

Aaron Porter, president of the National Union of Students, is dismayed at the decision.

"That many students will be hit by hundreds being added to their debt at a time when youth unemployment is at nearly one million is further demonstration that the current system of funding is broken," he said.

The news will be a blow to recent university leavers who are already struggling with their debts as they seek graduate opportunities in the current tough jobs market.

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