Deflation pushes student loan interest rate below zero

From today, graduates paying off student loans taken out before 1998 will see their outstanding balances shrink, even when no payments are made.

The UK’s government-backed student loans system uses the Retail Prices Index (RPI) to set an annual interest rate, which is applied from 1st September.

The RPI measure turned negative in March as the recession deepened, meaning that the rate payable on student loans taken out before 1998 now stands at minus 0.4%.

The shift into negative territory is a first for the student loan scheme and according to reports, around 390,000 graduates will benefit.

Meanwhile, the Student Loans Company has reduced to zero the rate payable by around 3.26 million students and graduates with loans taken out after 1998.

The firm has defended its decision not to apply a deflationary rate, explaining that post 1998 loans are already “well-subsidised”.


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Berkeley Law Expands Loan Program

UC Berkeley's Boalt Hall School of Law announced this week that it's expanding its loan repayment assistance program for alumni who pursue public interest or government work.
UC Berkeley's Loan Repayment Assistance Program has been helping graduates repay their student loans for the past decade. It will expand in January to offer unlimited help to alumni who earn up to $65,000 a year. Previously the amount had been capped at $100,000 for alumni who make less than $58,000 per year.

"The law school provides the graduates who meet the income and employment requirements with a forgivable loan. Every six months, they're required to make their student loan payments," explained Berkeley Law Assistant Dean of Financial Aid Dennis Tominaga. He said those loans are forgiven if the students maintain the income and job requirements and uses the money make student loan payments.

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