The Ultimate Guide to Student Loans

Student Loans Guide

Ever since the current government increased tuition fees to £9,000, there have been a lot of suggestions that university would become a much more exclusive club, with only the rich able to afford to get a degree. But such suggestions have been proven to be nothing more than scaremongering, as more students than ever before are now applying for university.

So, all is good, right?

Well, not exactly.

Tuition fees are still high, while 5 years after the dramatic changes, the government passed another bill that would see the popular maintenance grant replaced by another maintenance loan. Although the government say that the amount of money a student is entitled to remains the same, it does mean they will have to pay more back at a later date.

Because student loans are now more confusing than self-employed tax returns, we’ve decided to revise our previously existing article to give you the lowdown on everything you need to know about the subject. Let’s take a look! (if you dare)

Who Is The Student Loans Company?

Student Finance is the government-funded initiative that hands out student loans. According to the website:

“The Student Loans Company is a non-profit making Government-owned organisation set up in 1989 to provide loans and grants to students and universities and colleges in the UK.”

In a nutshell, Student Finance was set up by the government 27 years ago to make higher education affordable to more students. Like with anything that is in the hands of the taxpayer, Student Finance is subject to the ebb and flow of the economy. And because the economy has taken a downturn in recent years, changes have been made to SF – such as higher fees and the retirement of the maintenance grant – in order to make higher education more sustainably funded.

What Type Of Loans Are Available?

There are two types of loans that most students are entitled to. How eligible you are comes down to your personal circumstances, as well as your parents’ income. But most students are entitled to:

  • Tuition Fee Loan
  • Maintenance Loan

Tuition fee Loans

Most students can’t afford to pay the £9,000 per year, which is the average cost of a degree in 2016. For this reason, Student Finance will assess your details and offer you a tuition fee loan which covers the entire cost of your degree. You won’t actually see this loan because it is always sent directly to your university.

Although most courses now cost £9,000 per year, some are priced differently. For this reason, it’s important that you always check the exact details before applying for a loan. Some universities will charge less because the £9,000 per year is the maximum amount a university can charge for a course. Some universities choose to charge less, but most students are indeed charged the maximum amount.

The tuition fee loan is repayable once you graduate and are earning a certain amount of money.

Maintenance Loan

Your tuition fees won’t cover everything. After all, you’ve gotta live, right?

The maintenance loan is a designed to cover your cost of living. Students use this loan to pay for rent, food, books, travel, nights out, study materials and so on. The amount you are entitled to comes down to your personal circumstances, but the maximum amount anyone gets in 2016/17 is £5,750.

Like the tuition fee loan, the maintenance loan is repayable once you graduate and are making a certain amount of money.

The big controversy here is that there is no longer such a thing as a maintenance grant, which was a non-repayable lump sum of money that contributed further to a student’s cost of livings. Instead, students whose household income is £25,000 or less will be qualify a bigger maintenance loan to fill in the hole. Naturally, this means you will have more to repay.

The “certain amount of money” you need to make before you pay anything back is £21,000+ per year. For as long as you continue to make less than this amount, you won’t need to repay a penny.

Although it seems unfair that the maintenance grant has been removed, the government say that the changes were necessary to make higher education more sustainable in the long-term.

But What If I’m A PostGrad?

One of the things that the current government has undoubtedly got right is the belated introduction of student loans that help cover the cost of postgraduate courses, such as Masters. Yay!

If your full-time or part-time Masters course starts after 1 August 2016, you can now apply for a student loan of up to £10,000. Bear in mind that this £10,000 is divided up between your tuition fees and living costs.

You are only eligible if you meet certain criteria:

  • You are aged under 60 at the time of applying
  • You live in England
  • You do not already have any type of postgraduate degree

Your eligibility is not dependent on your income.

Find out more about postgraduate loans here.

And, Hello? What About Me, The Part-Time Student?

Studying part-time gives you the flexibility to combine it with a job, look after any children you might have, or take care of a family member. Part-time courses will last twice the length of full-time courses, but you still get as much out of your degree as full-time students. And just like full-time students, part-time students are eligible for student loans which cover their tuition fees and contribute towards their living costs.

How much you are entitled to depends on your household income.

And What About Me, The Mature Student?

Yup! Even mature students are eligible for student loans, providing this is your first time at university. You apply the same way as younger students, and what you are entitled to depends on your household income – and not your age!

Special Support Grants

While the maintenance grant has been cut, special support grants are still available. Like the maintenance grant, a special support grant does not have to be repaid, and receiving one does not affect the amount you are entitled to in the form of a maintenance loan. A special support grant is indeed there to supplement your loan and to contribute further to your living costs.

Not everyone is entitled to a special support grant. To successfully apply, you need to meet one of the following criteria:

  • You are a single parent
  • Your partner, whom you live with, is a student, too
  • You have a disability that is already recognised by the government
  • You are deaf
  • You have been unable to work for the past 28 weeks or more due to a physical incapability
  • You temporarily left a previous course because of illness or because you were caring for someone, and now wish to resume your studies
  • You are over sixty-years-old

DSAs And Other Extra Funding

You could be eligible for a Disabled Student Allowance (DSA) if you have a physical disability. You may also be eligible if you have a long-term health condition, a mental health disorder, or a learning difficulty, such as dyslexia. If you are unsure whether you are eligible or not, you can read the definition of disability to find out.

A DSA is a non-repayable grant that supplements your cost of living. Students can use it to purchase specialist equipment and software, as well as travel. Although there are no rules on what you can and cannot spend your DSA on, these are the general things that students use it for.

The amount you receive is dependent on a few factors related to your individual needs, and household income is not one of them.

Childcare Grants

To be eligible for a non-repayable childcare grant, you must be a full-time student who has at least one child.

From 1 August 2016 onwards, if you have one child, you are entitled of a maximum £155.24 per week.

If you have two or more children, you are entitled to a maximum amount of £266.15 per week.

Travel Grants

If your course is such that are required to spend at least half the time abroad, you might be eligible for extra funding from Student Finance that will go some way to covering your travel expenses. And because this extra cash comes in the form of a grant, you don’t need to repay any of it. Unlike the above grants though, a travel grant is based on your household income.

To be eligible, you must live in England, and a requirement of your course must be that you are studying abroad for at least 50% of its duration. You will also be eligible if you’re on an Erasmus work placement or study.

As mentioned, the amount you get is dependent on your household income. It is up to you to pay the first £303 of your travel costs, but once you spend more than thus, you can claim back all extra costs. For example, if a plane ticket to America costs you £700, you can claim back £397.

Medical insurance is covered as long as it’s mandatory, as are medical expenses and VISAs.

How Do I Apply For A Student Loan?

Although a lot of heady figures are involved, applying for a student loan is actually a really easy process once you get started. When you are ready, you need to hop on over to Student Finance and create an account.

You then need to fill in a series of forms, before sending in any evidence requested to support your application. If you’re applying for a means-tested loan, you will be asked to provide your identity, as well as your household income.

Student Finance will then process your application before sending you a form that details the exact amount you are entitled to. You then need to sign the form before mailing it back.

It really is as simple as creating an account, following the steps, sending in your evidence and signing and returning the form.

When Will I Get My Loans?

Good question.

Lots of first-year students can’t wait to move into their halls of residence, and usually they do so at least a week before uni starts.

Then, they just want to go out and party with their new flatmates, spending the first chunk of their maintenance loan on booze.

Only, there is one snag: The loan STILL hasn’t arrived in their bank account!

This is because your maintenance loan is not deposited in your account until after your first day of university. The student loans company wants to make sure you’ve registered and are actually a legit student who wants a degree.

Once you have registered on your first day, you basically have to play the nail-biting waiting game until your student loan is in. Some students receive theirs the next day, while others are left waiting for another week. It all comes down to your bank and how quickly they process the money.

But whenever it arrives, you can bet it’ll be the happiest day of your life.

You don’t receive all your maintenance loan in one go. Because Student Finance realises that students need to make sure their loan stretches from September until May, you get your loan in three separate instalments:

  • September
  • January
  • April

Your tuition fee is paid directly to your university, and as such it isn’t something you need to worry about. The only time a student even thinks about this loan is when it hasn’t been paid for whatever reason. If this ever happens, you need to phone up Student Finance to find out why.

How Much Do I Repay?

This is the scary bit that can easily put a hesitant student off applying for university. But as long as you settle it with your mind that you don’t need to repay a penny until you graduate and are earning at least £21,000 per year, you’ll be able to breathe more easily.

Although tuition fees have rocketed to £9,000, the amount you repay has not rocketed with it. Moreover, once you are earning over £21,000 in your cushy new job, you only repay 9% on any earnings.

For example, if you were earning £22,000, you would repay £90.

It’s important to note, though, that these payments are spread out over the year. If you are earning a cool £30,000 per year, you would pay back some £810 over the course of the year.

These figures are generally not something you need to worry about right now, and they probably won’t play on your mind too much in the future either. Your repayments are always deducted automatically from your monthly pay packet, and as such you never even see the money in the first place.

But What About Interest Rates?

You are charged interest from the moment you make your first payment until you pay off the entirety of your loan. Interest will be added to the full amount you owe each month.

The current interest rate for student loans is 0.9% APR, and it is based on the UK Retail Price Index. The exact amount is variable and depends on your unique circumstances. It is updated just once a year in September.

The UK Retail Price Index (RPI) measures our country’s inflation, and the government uses the rate of RPI to set the interest rate charged on your student loan.

Your Circumstances Interest Rate
While at uni and until the following April after graduation RPI + 3%
If you quit your course early before April 2017 RPI + 3% until the following April
If you are earning less or over £21,000 after April 2017 RPI
If you are earning over £41,000 Rate is dependent on your income. Rate is on a rising scale up to RPI + 3.9%

How To Re-Apply For A Student Loan

You don’t need to worry about re-applying for a student loan for Year 2 until Student Finance themselves get in touch with you.

Then, you will need to login to your account and notify SF if any of your circumstances have changed. For example, perhaps you lived at home with your parents during the first year but will be moving out in the second year. As such, the amount you are entitled to may change.

It’s important to notify SF of any change in your circumstances because any change can affect how much you are entitled to. For example, if you lived away from home during the first year but move back in the second, SF will want to know about it. If you fail to notify them and they find out at a later date, they will ask you to repay any money that you owe them.

What If My Money Doesn’t Arrive?

If it’s been over two weeks and your money still hasn’t arrived in your account, you should first login to your account to check for any messages you might have missed. If there aren’t any messages and the dates all seem to be right, the best thing to do is give Student Finance a call.

Unfortunately, a few students are often left waiting longer than their mates for their maintenance loans to arrive. If this happens to you, just know that the money will come eventually.

In the meantime, just beg your mates for a pint!