Confused about student loans? You’re not alone…
Ask people what worries them most about starting university, and ‘student loans’ will often come up as the answer. But taking out a loan doesn’t have to be as scary as you’d imagine – and understanding how they work is a vital part of keeping your finances in check.
To help you get to grips with the basics, here are few key things you need to know about student loans, and how to apply for them:
What is a student loan?
A student loan is a type of loan specifically designed to help students in the UK cover their university tuition fees and living costs.
They’re provided by The Student Loans Company.
What types of student loan are there?
There are two main types of student loan, both of which you’ll be eligible to receive:
Tuition fee loan – which covers the total cost of your course, and is paid directly to your chosen university or college.
Maintenance loan – designed to help students cover their living costs, and paid directly into student’s bank accounts each term.
How much will my student loan be?
The amount of student loan you receive will depend on the yearly fees charged by your university or college. Currently, these will be up to £9,000 a year.
However, your family circumstances, current location and chosen location of study are deciding factors in the amount of maintenance loan you receive.
When do I start paying back my student loan?
The good news is that you don’t have to repay your student loan straight away.
Because your student loan repayments are actually linked to your income, you will only start making repayments once you earn £21,000 or over a year.
Student loan repayments are fixed at 9% of everything you earn above the £21,000 threshold.
If you’re employed, the repayments will be deducted straight from your salary – there’s no extra legwork on your part. If you’re self employed you will make repayments when you do your self-assessment tax return.
If you lose your job, your repayments will drop accordingly. The same goes for reducing your hours or taking a pay cut – so there’s no need to panic about your making your repayments.
How do I apply for a student loan?
If you’re from England, you can apply for a student loan online via the Directgov website.
However, bear in mind that you’ll need to set up a student finance account to get started, and provide details of your household income. You’ll then receive a loan declaration form within six weeks – which you’ll need to sign and send back.
And always check the deadlines for student loan application. Getting your application in on time will guarantee it arrives before the start of term.
Will my maintenance loan cover everything?
This will largely depend on your living costs. Before you get to uni, try drawing up a budget plan to help you avoid over-spending in the first few weeks.
Although grants and bursaries may be available to students who are already enrolled at university, anyone starting in 2016-2017 will not have access to them.
Instead, they are replaced with a means tested maintenance loan of up to £8,200, repayable in the same way as your tuition fees loan.
What if my loan isn’t enough?
Many university students seek out part time jobs to help stretch their budgets further. Examples include:
- Bar work
- Mystery Shopping
- Working for their university
- Agency work
Looking to supplement your student loan? View all available part-time roles now.