• Jagraj Singh

Student Finance in a Nutshell

Quick Stats

  1. £17 billion is loaned to around 1.3 million students in England every year.

  2. The value of outstanding loans at the end of March 2019 reached £121 billion.

  3. The value of outstanding loans is expected to be £450 billion by mid-century.

  4. The average debt among borrowers finishing their course in 2018 was £36,000.

  5. It is estimated only 30% of current full-time undergraduates will repay their loan in full.


What are Student Loans?


Student Loans are loans intended to help those who go to university with tuition fees and living costs, whether they are full-time or part-time. These loans can be for undergraduate or postgraduate study.


Tuition Fee Loan:


Every university sets their own tuition fees, with most courses costing between £9,000 - £9,250. It's important to understand how much your course will charge for when you apply for your loan. This loan does need to be paid back but only after your course has finished and your income is higher than the repayment threshold.


Maintenance Fee Loan:


This can help pay for living costs such as rent, food, travel, books and other costs. Similar to the tuition fee loan, this doesn't need to be paid back until your course has finished or your income is above a certain threshold.


SFE vs SLC:


Student Finance England deal with the allocation of loans and your application. The Student Loans Company deal with the repayments once your graduate.



Eligibility


Age:


There is no age limit for student finance however if you are over 60 year's old on the first day of your course, you will not be able to apply for the basic Maintenance Loan.


Previous Study:


Student finance is typically only available for your first degree or higher education qualification, unless you are studying an exception course such as Nursing, Midwifery or Teaching.


Generally speaking, a tuition fee loan is available for the full length of your course, and 1 extra year in case you change your course or have to resit a year.


Year's of Funding = Length of Current Course + 1 Extra Year - Year's of Previous Study


Course:


The course you study must be at an eligible university or college in the UK and one of the following:

  • first degree, eg BA, BSc or BEd

  • Foundation Degree

  • Certificate of Higher Education

  • Higher National Certificate (HNC)

  • Higher National Diploma (HND)

  • Diploma of Higher Education (DipHE)

  • Postgraduate Certificate of Education (PGCE)

  • Integrated Master's

  • Initial Teacher Training (ITT)


Amount:


The amount of loan you can receive entirely depends on circumstantial factors, and given the maximum maintenance loan amount changes every year, it is worth checking out this government website to check how much you could potentially get!



Applications


How:


New Students:

  1. Set up a student finance online account

  2. Log in and complete the online application

  3. Include your household income

  4. Send in proof of identity (passport) if needed


Continuing Students:


You’re a continuing student if you are:

  • moving on to the next year of your course

  • repeating a year of the same course or returning to a course after taking time out

  • transferring onto a new course from your old course

All you need to do here is log in to your online student finance account and apply online.


Independent Students:


If you have supported yourself financially for at least 3 years or had no contact with your parents for over a week, you may be able to apply as an independent/estranged student.


When:


The following table shows when you can apply for student finance:

Reference



Repaying the Loan


As of September 2020, there is a "Plan 1" and a "Plan 2" repayment system.


Plan 1 - Student Loans taken out before September 2012

Plan 2 - Student Loans taken out after September 2012


Thresholds:


Each plan has a repayment threshold for weekly or monthly income.


You repay:

  • 9% of the amount you earn over the threshold for Plan 1 and 2

  • 6% of the amount you earn over the threshold for a Postgraduate Loan.


Plan 1:


Currently, the threshold is £372 a week or £1,615 a month, before tax and other deductions.


Interest rate - 1.1%



Plan 2:


The threshold is higher than Plan 1 at £511 a week or £2,214 a month, before tax and other deductions.


Interest rate - 5.6% while studying. It then varies on your income after you graduate, ranging from 2.6% to 5.6%.



Postgraduate Loan:


The threshold is slightly higher than Plan 1 but lower than Plan 2 at £404 a week or £1,750 a month, before tax and other deductions.


Interest rate - 5.6%



Summary:


Student Loans are important, and unless you can afford to pay it all off straight away, you will end up having to apply and repay a student loan at some point in the near future. There is the ever growing issue of student debt, however we will discuss that another time!


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