If you’re starting university this year, be warned: your student loan is about to get much more expensive.
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Martin Lewis, the money-saving expert, has warned anyone starting university in September that the interest rate on their student loan is set to increase.
The current interest rate on student loans is 4.6%, but from September, it will increase to 6.1%. That means that if you have a typical £9,000 loan, your monthly repayments will go up by around £5.
Lewis urges anyone starting university this year to understand how much their loan will cost them before they take it out.
“The biggest myth about student finance is that its free money,” Lewis said. “It isn’t. It is a loan, and you will have to pay it back.”
He also warned students not to be tempted to take out more than they need for their tuition fees and living costs. “Be frugal: keep track of your spending, budget carefully, and make sure you know exactly how much you are borrowing,” he said.
Finally, Lewis recommended that anyone taking out a student loan should consider setting up a separate savings account instead of using an expensive overdraft or credit card. This way, students can save money without getting into debt at the same time.
Starting university this year might cost you more in student loan repayments, but with a little bit of savvy budgeting and wise financial planning, you can keep your expenses under control.
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