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You will all be aware of the protest at the government’s decision to ask students to put significantly more of their future earning towards their education, and the political storm that has ensued as a result. Pure Potential’s role in all this is not to take sides, point fingers or make judgements, but to make sure that you, as the first year group of students to be going to university under this new system of fees, loans and grants, understand fully the financial implications of it all, and realise that it is not quite as bad as the newspaper headlines like to make out.
Although it’s never been more expensive to go to university, there’s never been a wider range of financial help and support available to students and their families. The main thing to remember is that you will not, under any circumstances, have to pay for any of your own fees whilst you are a student. Your student loan will cover this completely however high the fees are. In addition, you may be eligible for a further loan to help with your living costs. There has been a lot of exaggerated media discussion about student debt, so it’s important to keep sight of the reality.
It certainly remains the case that you should not let yourself be dissuaded from going to university because you’re worried about money, and the new reforms offer a more generous package to those from the lowest income families.
The crucial point about the student finance system is that you won’t have to pay it back unless and until you have enough money to be able to.
So dispel all thoughts of bankruptcy and living off baked beans for the rest of your life, because you won’t have to pay anything back until you are employed and on a rather decent salary of £21,000.
So what are the costs?
There are two main costs: tuition fees and living costs, of which tuition fees are the most worrying-factor for students. Here is a short summary of the new tuition fee system:
Any university or college will be able to charge a graduate contribution of up to £6,000 per year, and in exceptional cases some universities will be able to charge up to £9,000. Universities will also be able to charge different amounts for different courses. In order to be able to charge over £6,000 universities will have to demonstrate extra work in encouraging wider participation from students from different backgrounds and ensuring fair access.
Although it may be tempting to apply to the universities that charge the least, don’t fall into this trap too easily.
It will be the more respected universities, with the best resources and the leading professors that will charge more, and their courses may be worth more to you in the future ; having a top university on your CV is invaluable, so don’t make your choice on the basis of cost alone.
For more information on tuition fees, please visit the Save the Student website. Save the Student is a popular website where you will find a wealth of information and advice on a range of finance topics including student finance, discount vouchers and student offers. Visit the Save the Student page on our website for more information.
Where can I get the money from?
Your student loan is unlike any other loan you will ever have in your life, and although you will be charged a real rate of interest, it will be tapered to increase gradually as you earn more. Furthermore, repayments don’t start until after you’ve started earning, and they’re based on a proportion of your income, not on the size of the debt, but we will deal with that bit later... Finally, the government has now agreed to write off any debts still unpaid 30 years after the completion of your course. There are different types of loan:
Tuition Fee Loan - The government will lend any eligible students the money to pay tuition fees, which you won’t have to pay back until you are earning at least £21,000. This is regardless of your household income.
Maintenance Loan - You can apply for a means-tested annual Maintenance Loan and the amount you are entitled to will depend on your household income. The amount you receive also depends on whether you choose to live at home whilst studying or, if you live in London, you are entitled to a little more due to higher living costs. You can calculate exactly how much you could be entitled to on the www.gov.uk website.
Part-Time Student Loan - For the first time, part-time students studying at least 25% of their time, will be entitled to a loan and will no longer be required to pay their fees upfront.
Government grants will be available for students from low income households, and unlike loans, means-tested grants (which means that the amount you get depends on your household income) do not need to be repaid. Two family income ‘bands’ have been suggested; up to £25,000 entitles a student to the full grant of up to £3,250 per year, and £25,0000-£42,000 which will mean entitlement to a partial grant.
Universities and higher education colleges offer additional, non-repayable financial help in the form of bursaries which are allocated according to the university and course you choose and your household income. Under the new rules those universities that choose to charge over £6,000 will also have to demonstrate that they are supporting applicants from lower income households, so ring up the institutions you are thinking of applying to and find out what support is available and how to apply because each university has their own rules about entitlements to bursaries and their own procedures to follow.
Universities sometimes offer scholarships to high achieving students. You’ll get a direct payment from your college or university- how and when this is paid is decided by the institution. If you are looking to apply for scholarships find out what is on offer from the institutions themselves by calling them – they will often have set up their own schemes with their own individual criteria for application.
Part Time Job
It’s a good idea to get yourself a part-time job while at university. It’s a great way to make friends, get some work experience and earn a bit of cash. A word of warning though, if you find yourself working so much that it is adversely affecting your studies then cut your hours back. There is absolutely no point earning money to pay for a degree you can’t study because you are working too hard to pay for it. Don’t miss lectures and tutorials and make your employer aware from the start that you are a student.
When do I have to pay it back?
The government won’t ask you to pay back the money until you are earning £21,000 or more, and even then they will only ask for 9% above £21,000 of what you are earning, which should be easily affordable.
Will I be charged interest?
Yes, for the first time in 2012 you will be charged a real rate of interest on the money you borrow, and this will be tapered to the amount of money you are earning. For graduates earning below £21,000 there will be no real rate of interest applied to your loan, if you earn between £21,000 and £41,000 you will pay a maximum of 3% Retail Price Index (RPI – the general measure of inflation in the UK), and if you start earning the big bucks, ie over £41,000, then you will pay the RPI rate plus 3%.
How can I apply?
Student Finance Direct is the body responsible for processing student finance applications. You can find the information you need at www.gov.uk/student-finance-register-login including the application form itself.
Getting a grant
To apply for a grant, you will need your National Insurance number and a bank account. If you don’t have your N.I. number, call 0845 915 7006. If you don’t have a bank account, don’t worry, you can set one up nearer the time of the payments. You will also need either your birth certificate or passport and whatever additional documentation your Local Education Authority (LEA) requires. Then you contact your LEA to order an application form which can be done by phone or online at www.gov.uk/student-finance-register-login. Alternatively, you can call 0845 607 7577 for advice on the application process.
Where do I find out more?
- Download this summary of student finance courtesy of Peter Boursnell, MBE formerly of Brent Aimhigher.
- Save the Student! - A large student site with plenty of advice on student finance. They also have a great directory with all the student discounts available to help you save money throughout university
- Student Cash Point is the UK’s most comprehensive source of information on student grants, loans, bursaries, scholarships and awards. It offers free access to over 3,000 funding opportunities for those studying in the UK.
- www.gov.uk - Government website providing tips and advice for tuition fees (with helpline numbers), how to get financial aid and the loan application process.
- www.slc.co.uk - (Student Loans Company) Official website that provides you with your student loans. Includes a student loan calculator tool – a quick and easy guide to help estimate what you may be eligible to receive.
- www.brightknowledge.org - Education charity BrightsideUNIAID provides advice about student finance and much more in their online Bright Knowledge library
- www.studentfinancewales.co.uk - If you live in Wales or Scotland a different set of rules apply. This website will give you the information you need.