The introduction of tuition fees has caused a great deal of confusion about the true cost of going to university. The question of student finance has become a serious issue for many potential students, with some even being put off going to university by the idea of amassing huge debts.
But what is the real picture, how best to apply for student finance, and should the cost really be a concern for you?
The first thing to understand is that no one has to pay for their fees up front. Student finance is structured in such a way that your student loan is only ever repayable when you can afford it. What’s more, because the interest rate on your student loan is set at base rate plus 1%, or inflation whichever is the lower, you will effectively pay no ‘real terms’ interest on your loan, so it will not grow into an unmanageable monster.
You only start to pay back student loans when you earn £21,000 or more, and then only at a rate of 9% of anything over that amount. So if you are lucky enough to get a graduate job paying £22,000, you will only pay back £90 per year, or around £7.50 a month.
As well as getting student finance to help with your course fees, you can also get a loan to help pay your living expenses. You can get a maintenance loan of up to £3,823 per year. You may also qualify for a maintenance grant to help with student finance. If your parents’ income is under £25,000 per year, you will get a grant of up to £3,354, and you will get a partial grant if their income is under £42,600.
Many universities also offer bursaries to help with student finance. This was one of the conditions of the increase in tuition fees. Bursaries are grants and are not repayable, so they don’t add to your overall student debt. The National Scholarship Programme is also designed to help with student finance for families with incomes under £25,000. Both bursaries and scholarships are independent of other student finance, and will not affect the amount you receive as a grant or student loan.
The grants and loans system of student finance described above applies only in England. In Scotland, Wales and Northern Ireland, student finance works slightly differently.
Students in England, Wales and Northern Ireland can opt to have UCAS student finance to share their personal details and details of their course with the Student Loan Company, and to remind them when the student finance application process opens. This pre-populates your loan application form and makes applying for student finance support so much simpler. Students in Scotland can ask UCAS student finance to share their details with the Student Awards Agency for Scotland.
You can also find lots of useful lots of independent advice and guidance on student finance on the MoneySaving Expert website.