May 29, 2015
What is a Tuition Fee / Student Loan?
The Tuition Fee Loan, also known as a student loan, is what many students choose to apply for to help them cover the cost of going to university. It is non-income assessed and it is there to help many students in the UK, whether they are studying full or part-time, who would otherwise struggle with tuition fees. Any full or part-time students from the UK and EU can apply for a Tuition Fee Loan.
Apply for a tuition fee loan here: https://www.gov.uk/apply-online-for-student-finance
Different Types of Tuition Fee Loans for University Students
Different courses cost different amounts for their tuition, which can depend on a number of factors such as the country of study, and the university or college you will be receiving tuition from. Universities can charge whatever they like for courses depending on the maximum rate set by the government, which is currently set at £9,000 per academic year.
If a course has tougher requirements, is more competitive and popular, and the university or college has an admirable academic reputation you may find tuition fees are more expensive.
Once you have successfully applied for a student loan:
Students who apply and are successful will receive the first instalment of their tuition fee loan once the University has notified the relevant body that the student has started at their institution. Instead of the money being handed over to the students themselves, this is then transferred to the University or colleague who will use the money to cover the costs of tuition. If the loan does not cover the cost of tuition the student will be required to find other means to completely cover their costs.
Upon graduating university students are required to repay their tuition fee loads and these are also subject to interest.
Full-time tuition fee loans vs. Part-time tuition fee loans
Students who are going into full-time University of college education can receive up to a maximum of £9,000. If the student is studying full-time at a private university of college this figure is £6,000. Part-time students can receive a maximum amount of £6,750 and part-time students who chose to study at a private university or college can receive up to £4,500.
How to Apply for a Student Loan in the UK
The easiest way to apply for a student loan if you are a new student from England is via the Student Finance England’s website. You need to set up an account with them online, and will then be able to complete the online application form including details of your households income.
Once you have filled out the details you will need to sign and return the loan declaration. Be aware you may need to send in proof of identity as well. The loan declaration should be with you within 6 weeks of completing the online form.
If you are a continuing student from England you should already have an account set up. In that case you can simply log in and apply online.
Part-time students, and students from the rest of the UK have to go through a slightly different, yet still straightforward process to apply.
Students Applying from the EU:
New students from within the EU are not able to apply for a tuition fee loan online, however will be able to download the application pack and send it, and then wait for the letter which will let you know whether your application has been successful, and how much you can expect to receive. EU students that are continuing their courses will be sent the forms automatically.
Other types of loans for students:
Students can apply for different types of loans to help them cover the costs of continuing their education. Another popular loan is the Maintenance loan, which unlike the Tuition Fee Loan, is paid directly into student’s bank accounts to help them with general living costs while studying.
If you are living at home you can still apply for a Maintenance Loan of up to £4,565. If you are living away from home, but still outside the capital you can apply for a loan of up to £5,740 and if you are living within London, up to £8,009.
For Full-time UK students there is also a possibility of applying for a Maintenance Grant to help with your living costs. The Grant is one, which you don’t have to pay back, however you should be aware that it would have a knock on effect on the amount you will be eligible to receive from the Maintenance Loan.
There is an online student finance calculator to estimate your Maintenance Grant and Loans.
Paying back your student and tuition fee loans:
Tuition Fee Loans and Maintenance Loans are repayable to the bank after you have finished studying. Even if you do not complete your course you still need to pay back any money you borrowed. There are several factors that play a part in when and how much you will need to pay back depending on which repayment plan you are on.
For English and Welsh students who started before the 1st September 2012 you only need to start repaying your Tuition Fee and Maintenance Loan when you are in employment and earning over £17,335 (this amount is subject to change).
When you start repaying your loan and what you pay depend on which repayment plan you’re on.
English and Welsh students who started on or after 1 September 2012 only start repaying when their annual salary is £21,000 and above.
If you are self-employed you will need to keep your own records to work out your student loan repayments, otherwise this will automatically be deducted from your pay and show up on your payslip each month.
Is a student loan right for you?
With university fees seemingly ever on the increase it can be a difficult decision when thinking about how to finance further education. Many parents and students automatically decide to apply for a student loan to cover their costs, however is that the best thing to do? If you can afford to pay out in one lump some is that better?
Student loans have had little praise in recent press however they are still very good deals when you compare how they work to normal loan types from the bank. You don’t have to worry about repaying the loan while your child remains at the university or college, and students have until the next April after they finish their studies before they will be asked to start repaying –even then that is only if they meet the criteria by earning over a certain amount (£21,000 as of September 2012) so if they aren’t yet earning a great deal, or haven’t secured a job you or they won’t need to pay back a penny.
Repayments are actually worked out fairly and are proportionate to the individual’s income (9% of their pre-tax earnings) so they should never be asked to pay out more than they can afford.
As with most loans students are expected to pay interest on them. While studying they are charged the rate of inflation + 3%.
After this any interest is again calculated in relation to income. Those earning under £21,000 = rate of inflation. Those earning £21,000-£41,000 will be charged the rate of inflation + between 0-3% depending on their income, and those on salaries of £41,000 will have an interest rate on their loan of inflation + 3%.
Other forms of borrowing generally have far higher interest rates and so the student loan is actually a comparatively good deal, involving no credit checks or hidden nasty surprises that could get them into financial difficulties.
Of course however, there isn’t a ‘one size fits all’ way to go when it comes to dealing with student finances. Many people who can pay student fees off in one go chose to do so for stability, budgeting and peace of mind. Not taking out a student loan and simply paying the fees then and there also means there will be no impact on the student’s future earnings and they won’t have to start their career in thousands of pounds worth of debt. Using you savings to pay for your child’s university education may be tempting, especially since interest of savings accounts is particularly low. However doing this will mean whatever interest you could have earned would be lost and you will have less disposable income.
There are plenty of useful websites, which have advice on tuition fee and maintenance loans. For further information on where to get help and advice take a look at the links below:
Preparing for university can be tricky and financial worries are commonplace. While student tuition fee and maintenance loads might not be the route down which every student will do, they are useful to ease the pressure of paying for university courses and living costs so your child can focus on getting the most out of their education.
For further advice get in touch with Tutor house as we will be able to answer any Pre-University application questions you may have.