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What’s the deal with student loans and debt?

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Congratulations! You’ve made it to university and you’re about to embark on an experience of a lifetime. But we all need a little help when it come to our finances so here’s all you need to know about student loans and debt and how to make sense of it.

The fees

The majority of university tuition fees are £9,000 a year for all undergraduate degree courses, whereas 2+2 degrees are charged at £6,000. If you are eligible for a student loan you won’t have to pay any money up front to start your course. The fees are paid directly from the Student Loans Company (SLC) to the University. Anyone in England is eligible to apply for a student loan and it is not linked to your salary or household income. However, tuition fee loans are not available for postgraduate students or those with another degree. International students are also not given anything; but EU students can be provided with a loan to cover their tuition fees.

The loans

Student loans are one of the cheapest and safest methods of long term borrowing as repayments are based upon your earnings, not the amount you borrow. Repayments of the loan will be 9% of income over £21,000. For example, if you earn £25,000 you’ll repay £360 per year. Repayments are directly taken out of your salary every month and if your income falls below the £21,000 threshold or if you become unemployed your repayments will automatically stop. What’s more after 30 years any remaining debt will be written off!

The grants

Students will also be able to access maintenance loans (repayable) and grants (non-repayable). Maintenance loans of up to £5,740, depending on income, will be available for all eligible English students. For those students from lower income families of up to £25,000 a year a grant of £3,387 will also be given and a partial grant is awarded to students with a family income of up to £42,620.

Further support

Further financial support is available for disabled students via the Disabled Students’ Allowance (DSA). This is available to help if you are studying at university and incur extra costs because of a disability (including long-term health condition, mental health condition or learning difficultly such as dyslexia). DSA is non repayable nor dependent on your income and are paid in addition to standard student finances.

The inflation

Maintenance loans are subject to interest at the rate of inflation plus 3 percent whilst you are studying. This figure is valid until the April after you graduate in which case after the interest rates will be subject to change. The amount you repay is dependent on your income. For example, if you earn less than £21,000 you will pay interest at the rate of inflation whereas if you earn above £41,000 your repayments will be charged at the rate of inflation plus 3 percent.

The scholarships and bursaries

Each university may have their own scholarship and bursary scheme for academically able students, which is non-repayable and independent of family income. For example, to be eligible for this award at Warwick, students must have attended a state school or received a fully-funded bursary at an independent school. Students whose parental income falls below £16,000 are eligible for £3,000 and a partial grant is awarded for those with a family income of up to £35,001.

We hope you have found this helpful and that we have fully explored all the grants and loans available to you as students. Your adventure is about to begin!

Is there anything else you’d like to know about student loans and debt? Let us know in the comments below.

Photo: Simon Cunningham

Baljeet PanesarWhat’s the deal with student loans and debt?

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