1. What is UK Student Loan Interest?

The UK Student Loan interest is calculated based on your loan balance and the Retail Price Index (RPI) plus 3%. The interest is calculated monthly and added to your loan balance.

2. How Does the Calculator Work?

The calculator uses the UK Student Loan interest formula:

Where:

• \( Balance \) — Current student loan balance (£)
• \( RPI \) — Retail Price Index (annual percentage)
• 3% — Fixed additional interest rate
• 12 — Months in a year (for monthly calculation)

Explanation: The formula calculates the monthly interest by taking the annual rate (RPI + 3%) and dividing it by 12 months.

3. Importance of Calculating Interest

Details: Understanding how interest accrues helps borrowers estimate their total repayment amount and make informed decisions about voluntary repayments.

4. Using the Calculator

Tips: Enter your current loan balance in £ and the current RPI percentage. The RPI is typically published by the UK government each year.

5. Frequently Asked Questions (FAQ)

Q1: When does interest start accruing?
A: Interest starts accruing from the day your first payment is made to you until your loan is fully repaid.

Q2: Does everyone pay the same interest rate?
A: No, the rate varies based on your income. While studying and until April after graduation, it's RPI + 3%. After that, it's income-dependent.

Q3: How often is interest added to my loan?
A: Interest is calculated daily but added to your loan balance monthly.

Q4: Where can I find the current RPI rate?
A: The UK government publishes RPI rates regularly. Check the Office for National Statistics website.

Q5: Is interest charged during repayment holidays?
A: Yes, interest continues to accrue even during periods when you're not required to make repayments.