UK Students Reassured Over Security Of Loans

Fri, 05 Oct 2007

Students across the UK have been reassured bt the Student Loans Company that their loans are secure following the recent Northern Rock crisis.

The Newcastle based lender was last week forced to borrow heavily from the Bank of England after it was unable to keep up its balance of payments, although British students should be safe as their loans are secured by the UK Government .

"Students should not worry. The rate of interest on our loans is fixed and we are not a corporate bank," a spokesperson for the Student Loans Company said.

"The current instability caused by the troubles at Northern Rock has no impact on our ability to underwrite our loans ."

The Student Loans Company, a non departmental public body, issues loans to students studying in the UK on behalf of the government at a fixed and favourable rate of interest linked to inflation of the Retail Price Index (RPI), meaning that student loans would only be at risk if the RPI was to rapidly rise.

Britian’s Prime Minister has made the control of UK inflation a priority, to the extent where pay rises to trade unions have been refused on the grounds of national financial stability.

But, students who have taken out private loans in addition to those from the Student Loans Company are at risk in the event of a repeat of last week's fiasco.

Student loans and bank accounts with high street banks are usually no more secure than normal current accounts, which means that if banks are put under pressure, customers could start to feel the pinch as a result.
add to favouritesnewsletterlink to this pagesend to friendpost comments

Link to this page

Copy and Paste the following HTML into your page.