Have you ever applied for STUDENT LOANS? or Are you going to apply for?
Then this guide will really help you.
If you have applied for a student loan, it’s also important to understand what the money covers, how payments are made – and when you have to start paying back the money you have borrowed.
But with new rules coming in, new fees to pay and even scammers taking advantage to get hold of your loan before you do, it can be a little overwhelming.
Here to take a closer look at the student loan process - including everything from what you get, where it's paid into, when, and how long you have before they want any of it back.
What do student loans cover?
If your course begins this autumn, you can apply for a tuition fee loan and maintenance loan.
These repayable loans cover your tuition fees and offer help with living costs.
But crucially, under changes introduced a few weeks ago, students starting university courses in England will no longer be able to apply for grants towards living costs. Instead you can get a higher rate of maintenance loan.
Maintenance grants replaced by loans
Since August 1 this year, maintenance grants for students from low-income families have been replaced by maintenance loans.
This change was announced in July 2015 by the then Chancellor, George Osborne, in the Budget.
Finance experts warn this will see students taking on even more debt.
“Students from families with annual incomes of £25,000 or less will no longer receive a grant of £3,387 a year,” said Tom Stevenson, finance expert from Fidelity International.
“With these changes, some students are likely to end up saddled with starting debts of over £50,000.”
Current students unaffected
The changes to grants won’t affect continuing full-time students who have already started their course before August 1, 2016.
They will continue to receive the same Maintenance Grant or Special Support Grant they would usually get.
Extra help still on offer
The extra help available for students with a disability or students with children or an adult who depends on them financially have also not been affected by the changes.
Types of student loan
For those heading to university this autumn, there are two main types of loan to get your head around: tuition fee loans and maintenance loans.
- Tuition fee loans: New full-time students in England can apply for a tuition fee loan up to £9,000 for courses taught at publicly-funded institutions. The amount you get doesn’t depend on your household income.
- The loan is paid directly to your university or college in three instalments, one per term.
- Based on a three-year course, you are likely to have a debt of £27,000.
- Maintenance loans: Maintenance loans are available to help with living costs, such as food, rent and books. The amount you can borrow depends on where you live or study – as well as your household income.
The maximum loan available for the 2016-17 academic year is £10,702 for students living away from home in London, and £8,200 for those living away from home outside of London
Maintenance loans are paid into your bank account at the start of term.
Repaying your student loans
Once you’ve graduated, you only begin paying off your loan when your income is more than £21,000 a year.
Repayments are set at 9% of everything earned above £21,000.
“Student loans are proportionate to income, effectively making them more like a tax than a loan,” said Kay Ingram from financial planner LEBC Group. “If they are not repaid within 30 years they are written off.”
Tuition fees going up
From 2017, tuition fees are set to rise to £9,000 to £9,250.
While this may sound daunting, finance experts point out that this does not necessarily mean students will pay more to go to university.
“This is because repayments are set at 9% of everything earned above £21,000,” said Martin Lewis from Moneysavingexpert.com.
“This means most people do not already repay what they borrowed, plus interest, in full, over the 30 years before their loan wipes. Only very high earners, those on starting salaries of around £40,000 and above-inflation pay rises, will actually see the amount they pay in total increase because of this rise.”
Useful sites
For more information and to sign up for an online account visit Gov.uk/student-finance/.
Student Finance England (SFE) is part of the Student Loans Company (SLC) and administers the entire student application process for students in England, from processing to payment. Visit the Student Finance Zone.
Anyone who receives a scam email about student finance should send it to phishing@slc.co.uk.
*** When applying for STUDENT LOANS always be safe safe from scammers. Don't forget to check our other acticle
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