Understanding student finance

Higher education is a great way for you to broaden and enhance your career opportunities; however this path often has financial implications. On average university costs full time students in England £8,350 per year with most courses lasting 3-4 years.

But don’t worry; there are plenty of grants and funding options available to cover these costs. In this simple guide we will explain the options available so you can effectively navigate your finances.

Tuition fees

The cost of tuition varies greatly depending on where you live. For example most Welsh students are only paying approx. £4046 overall for tuition.

Student loans

The student loan is separated into two parts. Part one is the loan that covers your tuition fees and is paid directly to the university. Part two is the loan that covers your living costs (known as the maintenance loan). The combination of these two parts is what you will owe at the end of your course.

The good news is that you will only have to start repaying this loan once you are earning more than £21,000 per year.

Maintenance loan

The maintenance loan is the amount lent to you by the government to cover living costs for the duration of the course. The amount you will receive will depend on when you start the course, where you live and what your household income adds up to.

The maintenance loan will be paid directly into your bank account every term (3 payments per year).

Students from low income families or those who have special circumstances may be entitled to extra financial support.

Extra support

Maintenance grants (only available in Wales, Scotland and NI)

Maintenance grants are available for students in Wales to apply for. These grants are paid as a top up to the maintenance loan, only you don’t have to pay this money back.

Special Support Grants (England)

You may be eligible for a special support grant if:

• You are a single parent / single foster parent of a child less than 20 years old who is in full time education (anything up to higher education level)
• Your partner is a full time student and one or both of you is responsible for a child less than 20 years old who is in full time education
• You have a disability which qualifies you for the Disability Living Allowance, Disability Premium or Severe Disability Premium.
• You qualify for Personal Independence Payment or Armed Forces Independent Payment
• You are deaf and qualify for Disabled Students Allowance
• You have been treated as incapable of work for a period of at least 28 consecutive weeks
• You have a disability qualifying you for income-related Employment and Support Allowance
• You have taken time out from a course due to illness or responsibility of care and are now waiting to go back on the course

Educational grants

Many universities offer their own grants, bursaries, scholarships or fee waivers to students from low income families. They don’t affect the amount of student loan you are eligible for and they don’t need to be paid back.

Check the university website to find information about what they offer.

Additional funding support

There are several other financial support options for those with various circumstances. For a full list visit https://www.gov.uk/student-finance/extra-help

Loan repayments

As we have already mentioned loan repayments only begin once you are earning £21,000 or more. The amount that is repaid is 9% of what you earn that is above £21,000 and will be deducted from your salary.

For example if you are earning £25,000 then your repayments will be 9% of £4000 (the amount above £21,000) which is £360 per year / £30 per month.

Any amount still owed after 30 years is written off regardless of how much is still left to repay.

Interest rates

Interest is charged from the very first loan payment until you have fully repaid the loan (or after 30 years when the loan is written off).

The interest rate is based on the Retail Price Index (RPI) plus 3% and your income.

Whilst studying the interest will be:

• RPI plus 3%

After the course has finished the interest rate will be:

• <£25,000 income = RPI
• £25,001 to £45,000 = RPI plus 3% depending on income
• >£45,000 = RPI plus 3%

When to start applying for a student loan

Student loan applications open the spring before the course starts. It can take up to six weeks to give a response to a request for a loan and you don’t need to have a confirmed place to apply so it’s definitely better to get things rolling early (preferably before the summer holidays).

Can your parents afford to support you?

The more your parents earn the less student loan you will get because the government expects them to contribute to the fees. The reality is that many students don’t want to ask their parents for help and end up struggling with their living costs so it is important to discuss this with your parents before commiting to a 3-4 year course.