Student Finance: Everything that You Need to KnowSee All Uni Advice Articles
Student Finance is one of the most difficult things for students new and even the old to get their heads around. There is a fair amount that you need to be aware of before you go to university and finance is a big part of that.
There are many different sides to student finance. Whether it be the student loan repayments after university, or it’s the overall budgeting of your money every month, there are always things to consider when exploring student finance. Student finance in England or student finance in Wales or anywhere else can be different depending on the governing laws, however, they can also change depending on the rules and laws laid out by the universities that you’re attending.
What Do Tuition Fees Cover?
Tuition Fees cover all the charges made by the University that you’re attending with everything from registration, tuition, examinations, Student Union services and all other university services if you ever find yourself asking what is a students union, then be sure to visit our page to find out more and see what your money is going on, who knows, it may even help you to settle into student life!
Unfortunately, these fees won’t contribute towards your housing or anything else, like that. These are some of the other things that tuition fees cover at university:
- Access to the university library
- Access to the university’s computer facilities
- Student’s Union services
- Support services offered by the university
- Administration fees
Your tuition fees also cover other big expenses that the university is likely to be encountering, too, such as the general university upkeep, new facilities or new equipment for the university.
Do I have pay the university the tuition fees?
No. The tuition loan is paid from the student finance company directly to the university.
How Much Will I Be Paying at University?
Until around 1998, tuition fees were virtually non-existent in the United Kingdom, save for a couple of universities that charged their students, however, the legislation changed under prime minister John Major, who on the recommendation of The Dearing Report, introduced the idea of tuition fees.
However, the university fee caps that the government introduced, have risen on an election basis for a number of years. Fees initially started at £1,000 and have risen to £3,000, £5,000 and £9,000 respectively. At the moment, £9,000 is the most that a university can legally charge students.
The rate of tuition fees can be different depending on which country in the United Kingdom, you happen to be studying in. In England and Wales, fees are set at a maximum of £9,000 for everyone. People born in that country, pay the same amount as those coming from Scotland or Northern Ireland. Studying in Scotland is free-of-charge, for those that are born in Scotland and other eligible EU Nations (However, given Britain’s exit from the European Union (Brexit), this can change), for those from elsewhere in the United Kingdom, the price is £9,000. The price in Northern Ireland is £9,000, but for those who are from Northern Ireland, the price is significantly less at £3,925.
Am I Able to Get a Cheaper Student Loan?
Unfortunately, you won’t be able to shop around. Applying for student finance or taking a student loan out, will not be the same as comparing car insurance (Maybe you have a car to take to university, too!) or changing your phone provider (Not that that’s the easiest thing in the world to do, either). The prices that are set, are set by the government and are therefore unlikely to budge.
Costs can fluctuate depending whereabouts in the UK that you happen to be studying, but the change in money is unlikely to set the world on fire.
If you’re living in London, then it will not doubt be more expensive than studying in Londonderry or anywhere similar, as the prices can often be dictated by the cost of living in the place that you’re living in, and also by your living arrangements. While it can be annoying to see, the prices will essentially stay the same, give or take a few places, obviously, accommodation can be even more difficult, if you’re looking for accommodation after Clearing, too.
However, the fees noticeably change when studying in other countries. For those living in England, the situation is a little more advantageous, as there is more of an incentive to look around. Fees in England are at a record high of £9,000 and are unlikely to go down, however, studying in Scotland will be cheaper. As we said above, Scotland will still charge English students the same basic fee that they are accustomed to in England, but you may save a little bit of money all the same as Student Finance in Scotland, works very differently. Paying £7,500 would be a lot better for you than spending £9,000, even if it may only seem like a £1,500 differential, you are essentially saving nearly 17%, which could be all the difference between a comfortable and affordable education and a more expensive one!
Staying local to your home or even living at home during university will save you money in the long-run, but whichever way you look at it, the money involved with getting a degree, will be very expensive, regardless of how much you save. Going to university is an incredibly rewarding experience, but an expensive one too.
What is a Maintenance Loan?
A Maintenance Loan pays for your living costs. When receiving a Maintenance Loan you have to give the details of your household income and any other payments or direct debits or line of credits or any debts that you may have. The loan is then paid directly into your bank account at the start of every university term. On the off-chance that you don’t already have a bank account, check out the best student bank accounts for you.
Students that are in their first full-time higher education undergraduate course can receive a Maintenance Loan, however, the caps on a Maintenance Loan is also dependent on your current university situation as well. If you’re living at home, the cap will be significantly lower, than if you are living away from home. The loan will very much depend on your current financial status and on your family’s ability to help you, too. You can apply for a Maintenance Loan regardless of your income, but the amount that you will be able or eligible to borrow depends on your current income.
To claim a Maintenance Loan, you must have lived in the United Kingdom for at least three years before starting to study.
Maintenance Loans are different for students that are studying an NHS-funded course at degree level, in this instance, students can apply for a set rate of their maintenance loan to come in, coupled with their income-assessed NHS Bursary, which often comes as standard.
This can be different if you apply for a Maintenance Grant, which is aimed at students with a lower-income than other students, and whose circumstances require help, the amount of Maintenance Loan you receive will be slightly reduced, this too, will be dependent on the overall circumstances that you find yourself in. Students that receive a Maintenance Grant do not have to pay it back.
Maintenance grants and loans will not necessarily be enough for students to be able to survive on, so students will sometimes need to find a way to supplement their income, this can be by applying for a student job or by cutting their spending habits significantly, maybe by looking up some student budgeting tips. How to manage working and studying is essential, not only for financial benefits but also for experience and to learn new skills.
How Much Money Can I Apply for From My Maintenance Loan?
This can depend on your circumstances. The amount that you can actually borrow will, of course, be different depending on what your current university circumstances are. We have some rough estimations for you below:
- Living at Home: You can be entitled to around £6,000
- Living Away from Home: Roughly £8,000
- Living Away from Home (In London): Has been known to be around the £10,000 mark, depending on whereabouts in London you are.
- Living Away for Home (Abroad): Dependent on the country you’re staying in.
Of course, these rates, like any other rate, are open to interpretation and can fluctuate accordingly, depending on your own personal circumstances, such as your personal income status as a family.
How Much Maintenance Loan Am I Entitled To?
A Maintenance Loan, like so many loans, will always be dependent on the amount of money that your personal circumstances dictate and the place that you’re actually studying, to sue the Student finance calculator to see how much you should be entitled too. However, if you look below, you can see a rough estimate of the amount that you’re likely to be entitled to:
- Household Income of £25,000 or less, you will be entitled you to around £8,000
- A Household Income of £30,000, you will be entitled to roughly £7,000
- Household Income of £40,000 will entitle to around £6,000
- A Household Income of £45,000 will entitle you to around £5,000
- A Household Income of £55,000 can entitle you to around £4,000
- Household Income of £62,000 or more will entitle you to roughly £3,000
These rates are of course interchangeable and can deviate depending on different circumstances.
Am I Entitled to Maintenance Grant?
This follows much of the same for above. The allowance afforded to students will very much rely on the present circumstances to those that are applying and of course, not everyone is eligible for a Maintenance Grant, as these are generally aimed at students where the household income isn’t enough to support the student while at university.
Those who are in a family whose income exceeds that of £45,000 will not be entitled to a Maintenance Grant at all, and those who are earning just south of £40,000 will only be entitled to £50. The rest is dependent on the pay that is coming into the family household, however, the most that a Maintenance Grant will cover is just over £3,000 and very rarely more than that. So your Maintenance Grant will cover between £50 – £3,000.
Can Bursaries or Scholarships Help Me with My Student Loan?
Bursaries, Grants and Scholarships are an important part of university, as many of them are used as a way of being able to get academically exceptional pupils or those that are in a financially difficult position into university.
Bursaries and Scholarships are used in exceptional circumstances and are done for the two aforementioned reasons. If a student offers remarkable academic potential then a scholarship may be offered. These scholarships can range for covering your first year’s tuition fees, to covering your entire time at university, however, they are likely to have conditions that you will have to stick with; whether that be staying between a certain grade percentage or achieving a certain grade at the end of your first year or at the end of the overall university degree. And yes, tuition fees really do matter!
A Bursary will allow students that come from a lower-income household, the opportunity to go to university. The requirements for a bursary can be different, depending on your household income, your living situation for the following year, the university that you’ll be studying at and the bursary requirements themselves. The bursary works as a lump fund for the university to help your survive when you’re there. This can be split across the terms that you’re studying in or across the year and it’s not obligatory for the students to pay the bursary back.
What is a DSA?
A DSA is the Disabled Student’s Allowance, not only are the loans different but there is a slight difference with disability-based UCAS applications. The DSA provides extra funding to students that are attending university with a learning difficulty. These include everything from physical disabilities, all the way through to general mental health complaints at university, essentially, anything that prevents students from being able to work effectively at university.
As you can imagine, the burden of proof is on the student themselves; you will need to provide documentation to back up your claim for DSA and there is also a cash sum to pay for any specialist equipment, a helper, and any other help that you may need. The allowance that you are given by the university, is not included in any Student Finance that you receive, as it is a separate payment, another good thing too, is that it is not affected by any sort of household income and what’s even better, is that it doesn’t have to be paid back!
However, a word of warning, accepting any other disability related grants or any other financial incentives aimed towards helping with any disability support can affect your eligibility for DSA, so make sure that you check with your university, first.
What is a Hardship Fund and How is it Different from a Bursary?
Universities have a legal requirement to hold some money at the university that can help students that are struggling financially, this is a Hardship Fund. This is different from a bursary, however, as this is reserved specifically for particular circumstances, like students that are coming from low-income backgrounds or if the student has any disabilities or if they have any dependants. Bursaries are there to help people that are struggling financially, however, a hardship fund is specifically made for those that as well as struggling for money, also have circumstances beyond their help, like the aforementioned disabilities or dependents.
If you need to apply for a hardship loan before or during university, then, talk to the university’s welfare team or to the university’s onsite student money advisor about any emergency grants or loans.
What are the Biggest Expenses at University?
This is a difficult one for students. The cost of the course and the cost of a university degree will, of course, be a tough pill to swallow for students, but that isn’t even the biggest expense. When factoring in all of the different expenses seen at university, the biggest expense for students is most likely going to be the cost of living.
Now, the cost of living will depend very much on your circumstances, are you living at home during university, are you living at university or in accommodation – choosing the right accommodation is essential or are you working at the moment, are you studying/living in a big city etc… are all things to consider when at university. These are the factors that can change whether or not you have a large number of expenses, especially if you’re studying at a top city university, a top coastal university or a university with the best nightlife.
When at university, it is incredibly important to keep an eye on your expenses, the things that you’re spending money on and the money that you have coming in. As we’ve said above, the best thing for a student to do is to supplement their income with a job of some sorts. Whether that be a part-time job in an office, doing the photocopies and living out the life of Peter Gibbons in Office Space, or just working behind the counter in your local Tesco, it makes no difference, you need to be able to bring some more money to keep your costs down and your incomings up. Try to cut back on things that you don’t need, save your money where you need it and try and keep yourself away from things that are just going to bleed you dry.
Nights out are often a big expense at university and the people you meet on night’s out can be different, too, but that’s for another time. We recommend that you try and take part as much as you can, don’t try and avoid going out or being cautious about going out, just for the sake of money. Be smart about going out, but don’t just decide not to go out for no good reason. Remember, that university can be some of the best days of your life, don’t forget that you are allowed to have a life outside of work!
When Do I Start Repaying My Student Loan?
You won’t pay anything of your student loan back until you’re in a position to do so. Repaying student loans works very differently from any other kinds of direct debits that you’re likely to take on in your life.
Your student loan repayments work very similar to your National Insurance or tax contributions. You don’t ever physically pay the money back, the money is automatically deducted for your paycheque. For instance, if you earn £23,000-a-year, that works out at roughly £1,900-a-year. When you receive your payslip for your employers, you will see your tax deduction, your National Insurance contribution, Emergency Tax (If you’ve been paying it) and your university loan repayments.
However, you will not be paying your university fees back until you’re earning around £21,000 or more. When you are earning £21,000 or more, you will pay back at around a rate of 9%. The average university loan is around £48,000, which will take a long time to pay off, however, the payments will be so minimal you will hardly notice, and any loans that are no paid back within a thirty-year period, are automatically written-off. Most loans are paid back between a twenty year to twenty-five year period, which is roughly the same amount of time as the average mortgage.
What Percentage of My Salary Goes Towards My University Repayments?
This is an easy one to understand. Roughly 9% is contributed for your wages each month and is (as stated above) taken out of your wages, in much the same way that a mortgage repayment is made or your national insurance.
The repayments themselves can work out differently, depending on whereabouts in the UK that you happen to be studying. Repayments in Scotland are affected in a different way as the percentage changes, and this does not stay at a fixed rate like the rest of the UK. The percentage of repayment in Scotland can also depend on the amount that you earn.
In order to repay your loan in the rest of the UK, however, you need to be earning over a certain amount of money, which is roughly £18,000, although this figure has been known to change.
Will Missing a Student Loan Repayment Affect My Credit Rating?
Missing any repayments to your university does not affect your credit score at all. It is almost impossible to miss a student loan repayment, as they are taken for your paycheque before you even get the chance to spend it! As it works this way, this means that it is impossible to miss a repayment.
For any students that started higher education between 1990 and 1997, their student loan will impact on their credit score if they ever miss a payment, because the repayment system, is different to how the system is run today. The Student Loans Company will always write to late payers, which gives them 28 days to make contact with The Student Loan Company before the payment will actually show up on any credit records. However, if you started higher education between 1998 and the present day, your loan does not show up on credit reference agency’s databases
That being said, a Student Loan can have a small effect on any future mortgage applications. It’s nothing to panic about, it just means that your take-home each month, will be less than someone who is not paying a student loan, so mortgage lenders like to know what the amount of money coming into the house is.
When Do My Student Loan Repayments Stop?
This is dependent on whereabouts you studied. Not as in, which university, which country. In Northern Ireland, it is twenty-five years and in Scotland, it is thirty-five years. You also have to have been earning a certain amount of money in order to pay it back, and if you are unable to, then your debt is wiped from existence!
The more money that you earn, the more you will pay back and the less money you earn, the less you will payback. These are all dependent on the amount you earn and your present circumstances.
Does a Student Loan Entitle You to Tax Breaks?
In the words of Peep Show’s Mark Corrigan, “Chance would be a fine thing”. Unfortunately, your student loan doesn’t mean that you’re exempt for anything like tax breaks. Many students are unaware of this, they believe that having an added cost on their salary will mean that they either get a lower tax code or will have their tax written off completely. Boy, are they in for a shock! You’ll pay income tax on your salary before your loan repayment comes even comes into play, which can annoy a lot of people!
For example, if your annual salary is said £50,000 any income tax that you owe, will be collected as usual. When your loan repayment is calculated and taken, it’s still worked out from your initial salary figure, regardless of your other payments. It’s unfortunate, we know, but the tax breaks are non-existent for students, no virtually, literally. If they can get Al Capone, they can get you too, so don’t try and get out of paying income tax. Make sure you know enough about student tax before you move on!
Will I Pay Interest on My Student Loan?
Is the Pope Catholic? Get used to paying interest on a lot of loans in your life, and your student loan will be not different! In England and Wales, you get an added little goodie bonus, too! Your interest will be charged on top of the rate of inflation. Which is always…err…lovely. That means you’ll most likely be charged between whatever the going rate of inflation happens to be at that point, in time, plus whatever the actual percentage is on the loan.
It works differently when you’re at university, to when you leave university, as you can imagine:
Whilst at University: You will pay the rate of inflation (RPI) plus another whatever the percentage is on your loan. This will be the same until the April in the year that succeeds your graduation.
After You’ve Graduated: If you earn under the £21,000 threshold (See more above), your interest rate will be set at inflation (RPI), as with the old system, that you’re used to paying when you were at university. For every additional £1,000 that you earn, you will be charged an extra percentage per annum on your loan, which of course depends on your earning capabilities as you can imagine. Once you earn above the high-earning threshold, which is likely to be in the £41,000 region, you will likely incur an additional annual interest rate.
People Keep Talking About The Student Loan Company. What is The Student Loan Company?
The Student Loans Company (Often abbreviated to SLC) is an organisation established to provide financial services to those that are repaying their student loan. The company is responsible for a lot of the logistics involved with student loans and will also handle the majority of bursaries and the like.
The company is Government-run, therefore, it is not a separate entity to the rest of the country. Therefore, they will most likely have your best interests at heart and will be able to help you, should you ever run into any sort of financial issues.
If I Move Abroad, Will My Student Loan Stop?
Not so fast, slick! A common myth that is perpetuated by universities or by former students, is that if you move abroad for a certain amount of time, you will not have any debt to pay. That, unfortunately, is wrong. Very very wrong. You have to pay your student loan back regardless, and moving abroad won’t save you, unfortunately. Studying abroad won’t save you either. If you’re studying in America, the student finance in America is very different there, too, so be careful! The cost of studying abroad will obviously be drastically different, depending on the currency, too.
Sorry to burst the potential fee dodging bubble!
Can I Pay My Student Loan Back Early?
In the immortal words of Saul Goodman, “It’s never a bad thing to be early, except in death and taxes”, so of course, you can! So should you repay your student loan early? Whether or no you should is another question, however. Clearing your student debt, or choosing to make a larger contribution to getting your loan cleared will open up a couple of questions for you.
You’ll need to think about how much money you need to have as disposable income, it’s essential that you understand student debt. While the idea of paying back a student loan early may seem very appealing, you have to remember that it is money that you will now no longer be able to claim back, so if you’re out of money at the end of the money, you’ll just have to, unfortunately, live with it. It requires a fair amount of forethought, if you still want to go ahead with it, then take a look at your account and see if your cash can take the hit.
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