Dear Sir or Madam,

Please would you provide me with:

1. The rules upon which the Student Loan interest rate for
post-1998 loans are determined.

2. When the RPI is negative
(http://news.bbc.co.uk/1/hi/business/8009...) as it was
reported today at -0.4% to March 2009, what interest rate should
apply to Student Loans from September 2009.

3. Interest rates have fallen due the BOE base rate falling, and a
rule which states student loans cannot be more than 1% above the
base. Does the RPI benchmark or BOE base rate take precedence in
determining the final figure?

3. Do Ministers have the power to override the rate determined by
the formula in point 1, and if so what authorities do they have and
under what legislation.

Yours faithfully,

Dr K J Hamer

Thank you for your recent email. A reply will be sent to you as soon as
possible (where a response is required). For information, the
departmental standard for correspondence received is that responses
should be sent within 15 working days or 20 working days if you are
requesting information under the Freedom of Information Act 2000.

Your correspondence has been allocated the reference number
2009/0035846.

Department for Innovation, Universities and Skills
http://www.dius.gov.uk/index.htm

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Dear Dr Hamer,
Thank you for your email dated 21 April 2009 about Student Loan Interest
rates. We have not dealt with your letter as an FOI request as it is
seeking routine information

In answer to Q1 and Q4 - the rules upon which the Student Loan interest
rates for post-1998 loans are determined and the Ministerial powers to
determine the rate of interest are set out in the Education (Student
Loans) (Repayment) Regulations 2009. I have provided a link to these
regulations. [1]http://www.opsi.gov.uk/si/si2009/uksi_20...

In Q2, you asked what the interest rate will be from September 2009 when
the RPI is negative. Now that we know that the RPI is negative, Treasury
and DIUS will consider the options and make an announcement shortly. The
interest rate is only applicable from 1 Sep 2009, so there is no need for
an immediate decision.

Finally, for Q3 - for the academic year 2008/09 (1Sep to 31 Aug), the
interest rate was set at 3.8%, as this was the lower figure between the
March 2008 RPI and the highest of the base rates + 1% of a specified group
of banks. Had that figure been less than 3.8%, the interest rate for the
2008/09 academic year would have been reflected to show the bank base rate
+ 1% instead.

Yours sincerely,

Karen Duncan
STUDENT FINANCE POLICY DIVISION
[email address]
[2]www.dius.gov.uk

Your correspondence has been allocated the reference number 2009/0036870.

show quoted sections

Communications via the GSi may be automatically logged, monitored and/or
recorded for legal purposes.

References

Visible links
1. http://www.opsi.gov.uk/si/si2009/uksi_20...
2. http://www.dius.gov.uk/

Dear Sir or Madam,

Thank you for your response.

I have identified section 21 of the regulations to describe the
rules for setting interest rate levels.

There appears to be not provision for negative interest rates - can
you confirm if this is the case and if so, under what authority the
Secretary of State will decide the new rate in for 2009/10.

Secondly, I interpret from your answer to point 3, that the rate
chosen is the lower of the RPI and bank base rates+1%. Is this
correct?

Yours sincerely,

Dr K J Hamer

Thank you for your recent email. A reply will be sent to you as soon as
possible (where a response is required). For information, the
departmental standard for correspondence received is that responses
should be sent within 15 working days or 20 working days if you are
requesting information under the Freedom of Information Act 2000.

Your correspondence has been allocated the reference number 2009/0037669

Department for Innovation, Universities and Skills
http://www.dius.gov.uk/index.htm

show quoted sections

Dear Dr Hamer,
Thank you for your email dated 25 April 2009 about the interest rate applied to student loans.

I have not dealt with your enquiry as an FOI request as it is seeking routine information.

You will be aware that the Retail Price Index (RPI) for March is -0.4%. I understand that my colleague,
Karen Duncan, confirmed to you in her response 2009/0036870 that as RPI is negative, Treasury and DIUS
will consider the options and make an announcement shortly. As the interest rate is only applicable from 1
September 2009, there is no need for an immediate decision.

Ministers are considering any implications this might have for the repayment of student loans,
particularly for the rate of interest to be applied, and an announcement will be made in due course.

You may find it useful to know that a Parliamentary Question similar to your enquiry was raised recently
and the response is available within Hansard at:
[1]http://www.publications.parliament.uk/pa....
Yours sincerely,

Janet Crame
STUDENT FINANCE POLICY DIVISION
[2]www.dcsf.gov.uk

Your correspondence has been allocated the reference number 2009/0037669.

show quoted sections

Communications via the GSi may be automatically logged, monitored and/or
recorded for legal purposes.

References

Visible links
1. http://www.publications.parliament.uk/pa...
2. http://www.dcsf.gov.uk/