If you’re planning on attending uni next year, then you’ll likely already be thinking about applying for a student loan to financially support your studies – if you haven’t already applied, that is. Whilst student loans are undoubtedly a great thing for students that may not be able to afford to attend university otherwise, they do come attached with a certain amount of confusion around eligibility, how to apply, and how it works when it comes to repayment.
In light of the recent changes to the repayment threshold for student loans in the UK, we’ve pulled together a guide to help you understand the student loan process, as well as what you might need to consider when applying for your loan.
Understanding your student loan
What different types of loan are there?
There are currently two different types of student loan in the UK; tuition fees and maintenance loans.
Your tuition fees loan will cover (unsurprisingly) your university tuition fees, and will automatically cover whichever course you decide to enrol in. Student Finance England will pay your tuition fees loan direct to the university, so you won’t actually see this money in your account at any point.
Your maintenance loan will cover your cost of living whilst at uni, which could include your rent in halls or a student house, your food, travel, or just general living costs. The amount you can borrow for your maintenance loan will be dependent on your parents’ combined household income, so some students will receive a higher maintenance loan amount than others.
Who can take out a student loan?
Most people, including full time and part time undergraduates as well as postgraduates, will be to apply for a student loan to pay for their tuition fees at uni. However, whether you are eligible to take out a tuition fee loan will depend upon a number of factors. These could include your course and university, as well as your age and nationality. They will also consider whether you’ve studied a higher education course before when you apply for a student loan.
However, only full time and part time students will be entitled to apply for a maintenance loan, which is intended to cover a students’ cost of living whilst at university, such as their food, travel and accommodation. EU students are able to apply for a maintenance loan, however they must have lived in the UK for three or more years. The maintenance loan is usually paid in three instalments (one for each semester), and is paid direct to the student’s personal bank account.
How much can you borrow?
The amount you can borrow for your tuition fee loan will automatically be the amount required to cover the course fees for your university, as long as you’re eligible to take out the loan. This will be paid directly to your university by Student Finance England, so all you need to do is apply and provide them with the relevant information.
However it works slightly differently for your maintenance loan. How much you can borrow for your maintenance loan will depend on your parents’ or guardians’ household income, where you study, where you live, as well as how long you’ll be living there for, which means that not all students will receive the same amount.
However, there is always plenty of additional funding available, so if you’re worried about your affordability for university, it’s important to do your research - details of some of the additional maintenance loans and grants that are available can be found on the government’s website.
When do I need to apply for a student loan?
The dates change year on year as to when you can apply for your student loan. For example, full time students starting a university course for the academic year 2018-19 will need to apply by the 31 May 2018. You can keep up to date with the deadlines of when you need to apply by checking the government’s website.
Remember, you don’t need a confirmed place at university to apply, and you can apply for support for up to nine months after your course start date. However it’s also a good idea to be organised about your finances before heading to university. Find out how much maintenance loan you are likely to be eligible to receive, figure out how much your living costs are likely to be, and then calculate your budget accordingly. You may actually find that you don’t need to apply to borrow so much, decreasing the amount of student debt you will have when you leave uni.
Repaying your student loan
After all the fun of uni, it can be a bit daunting having to think about repaying your student loans on top of trying to find a full time job.
Well, the good news is that the government have recently changed the repayment threshold for anyone that started university after 2012, meaning that you will now only have to start paying back your student loan once you are earning over £25,000 per annum. This will also increase annually in line with changes to average earnings, and the legislation officially came into force on 06 April 2018.
But the important thing to remember is that repaying your student loan isn’t anything to worry about. The loan repayments are automatically arranged by your employer and paid out of your wage packet each month, which means that you never miss what you never had. The payments are based on your salary as well, so you won’t be paying more than what you can afford.
The bottom line is all students will have an element of debt, and it might feel like a lot to pay back when you leave university. However, it doesn’t have to be cause for concern – even making a loose plan as to how you will make your repayments, whether it’s creating a budget or having a think about what you might want to do for a future career, will make the world of difference to your peace of mind.