Guide to Student Finance
As exam results come flooding in, and university places get snapped up by a fresh batch of young undergrads, a clear sense of optimism hangs in the air, and rightly so. For new students the prospect of living away from home and finding new friends is a scary but exciting and rewarding prospect. While preparing for your new university life should take up the majority of your thought processes, it’s also worth casting an eye over your longer-term prospects, particularly student finance, and how it will affect you during and after university.
While at uni, you are likely to take out two loans. The first one covers your tuition fees, and it goes straight into the university’s coffers without even dipping a toe in your bank account. If you’re a full-time or part-time student, you have to pay tuition fees to attend university and unless you are lucky enough to get help from your family (or elsewhere), it is likely you’ll need a tuition loan to cover the fees, which are set at the following rates:
- Up to £9,000 for full-time students
- Up to £6,000 for full-time students at a private university or college
- Up to £6,750 for part-time students
- Up to £4,500 for part-time students at a private university or college
So how do these figures actually affect you? Well, short-term they don’t really, but that’s not to suggest you should dismiss them as a problem for later. Eventually, you’ll have to repay them and this will begin the April after you finish, if you are earning a minimum of £21,000 per annum. If and when you start earning this salary you will begin to pay the loan back at 9% of your annual earnings, which is taken out of your pay packet on a monthly basis. Hooray! Tuition loans are subject to interest, but it’s at a low inflation-pegged rate of +3%.
The second loan you’ll need is a maintenance loan, and this one you actually see - as it gets paid straight into your bank account. The maintenance loan is, as the name suggests, to maintain yourself, so it’s supposed to cover food, rent, books, ill-advised exercise equipment and whatever else you think is a good idea at the time. Unlike the tuition loan, which covers your fees exactly, the maintenance loan takes into account your parents’ earnings in stages. It’s a little confusing, but here are the amounts you’ll be able to borrow:
- Up to £4,565 if you’re living at home
- Up to £5,740 if you’re living away from home, outside of London
- Up to £8,009 if you’re living away from home, in London
- Up to £6,820 if you spend a year of a UK course studying abroad
Remember: these amounts are the maximum you can receive, and no matter how much your parents like or resent your decision to study some daft subject like Elvish, knitting, or maths, their income will shape the amount you get. So, as a practical example, if your parents’ combined household income is £62,000 a year or more, then they are expected to provide what the government refer to as a ‘subsidised contribution’ (adult pocket money) of £2,009. In practical terms, this means your maintenance loan would be a maximum of £3,731 a year if you were living away from home outside London. The maintenance loan is paid back in exactly the same way as your tuition fees are, at a rate of 9% of your earnings when they reach £21,000 or more a year.
Unless you’ve been living under a rock, you’ll probably be familiar with the kerfuffle regarding the government’s recent budgeting plan, which unfortunately directly affects you, the humble fresher. Currently maintenance grants (i.e. money you don’t have to pay back) are available for students coming from lower-income families at the following rates:
- £3,387 per year if from a household with an income of £25,000 or less
- £2,441 per year if from a household with an income of £30,000
- £1,494 per year if from a household with an income of £35,000
- £547 per year if from a household with an income of £40,000
- £50 per year if from a household with an income of £42,620
- No grant if from a household with an income of over £42,620
This is the good news, the bad news however is that from 2016/17 these grants will be replaced with loans up to a maximum of £8,200 a year. The increased loan will have to be paid back in the same way as the current loans, when you earn a minimum of £21,000 a year. The Chancellor’s budget plan also allows universities to increase tuition fees in line with inflation, which may well mean your tuition loan could increase during your three years at university. It’s worth remembering that tuition fee loans get wiped out after 30 years, so don’t worry about this too much. If you want to work out how much you are eligible for in terms of loans and grants, then try using the government’s student finance calculator for a bit of help.
University is a scary, but exciting and rewarding three years – enjoy every moment for what it is, and if you can keep an eye on your student finance now and again, the following years should just be exciting and rewarding, with no scares in sight.