Financing higher education- Money Support
Although there is a cost associated with going to university, it doesn’t have to break the bank of Mum and Dad! This article looks at different funding options for you and your teenager to explore.
For those going to university in 2017, Universities and colleges can now charge full-time students up to £9250 a year in tuition fees. Many courses will be cheaper than this (for example, when there are provided by local colleges), but in most cases, your child can expect to pay at least £7,500 a year (the average is estimated to be £8,350).
The UCAS website outlines the differing costs of tuition fees across the different countries of the UK. It also contains help for EU students. Fees depend on where you live with those who live and study in Wales paying no more than £4046 for their tuition.
The good news is that this doesn’t need to be paid by you! Students are able to take out a loan to cover the cost of fees and don’t need to pay this back until after they’ve graduated and are earning more than £21,000 a year.
It is possible to pay the fees partly from a loan and partly from savings but this is generally not a good idea and the vast majority take out a full tuition fees loan which is paid directly to the institution.
Find out more by visiting the relevant website for where you and your teenager live:
For England: https://www.gov.uk/student-finance
For Wales: http://www.studentfinancewales.co.uk/
For Scotland: http://www.saas.gov.uk/
For Northern Ireland: http://www.studentfinanceni.co.uk
What does the student loan cover?
There are two parts to the student loan. The first part of the loan is to cover tuition fees as above while the second part (the maintenance loan) is to help with living costs (accommodation, food, travel etc). The amount they can access for the maintenance loan per year depends on where they study, parental income, any maintenance grants they receive and what year of the course they are in.
The two parts of the loan are added together to give the total amount that they will have to repay. So a typical English student on a three-year course outside of London might expect to graduate with around £35,000 – £40,000 of student loan debt although it could be less if they are entitled to a fee waiver or maintenance grant (see below).
The maintenance loan is paid directly into the student’s bank account at the beginning of each term (3 payments a year). The tuition fee loan is paid direct to the university.
Students from lower income-families can apply for a Maintenance Grant as well as the loan to help with living costs. Maintenance grants are paid at the same time as the Maintenance Loan. They’re called bursaries in Scotland and Assembly Learning Grants in Wales. The amount you can borrow is reduced by 50% of the amount of grant awarded so the grant reduces the total debt while increasing the student’s income.
There’s also extra support for those with special circumstances. That might include if they have children (or an adult dependent), a disability, a long-term health condition, a mental health condition or a specific learning difficulty.
Even if they don’t qualify for additional funding they may be able to get other bursaries or grants from their university or college.
To repeat, your child only starts paying their loan back if they’re earning in excess of £21,000. If after leaving university they’re not working or are earning less than £21,000 per year they don’t have to pay anything back. And if they do earn more than £21,000 their repayments will be based on what they’re earning over the £21,000 threshold (see below).
Welsh repayments work in the same way, while for Scottish and Northern Irish students the threshold is currently £15,575.
The Institute for Fiscal Studies estimates that three-quarters of students won’t pay off their tuition fees. They also estimate that by 2020, average student debt will be £54,000.
Grants, bursaries, scholarships and fee waivers
Most universities offer various educational grants (which may be called grants, bursaries, scholarships or fee waivers) particularly to students from lower income families. These grants don’t need to be paid back at all and do not affect the amount of student loan you can get. Details can be found on the individual universities’ websites. In addition, some companies and charitable trusts also make grants to students at particular universities or at any university.
Find out more about this by visiting the Scholarship Hub. This site has a searchable database of all such grants. To get the hang of using this search tool try choosing “no specific university” under Institution or “no specific subject” under Course.
Students studying specific subjects
Maintenance Grant/Special Support Grant
This is financial support from the government that never has to be paid back. The amount they get depends on parental income. The grant is paid directly into the student’s bank account. If family income is £25,000 or less a full grant of £3,387 is payable. Above £25,000 the amount of grant tapers off. You can find out more by visiting: https://www.gov.uk/student-finance/loans-and-grants
Support in Special Circumstances
If a student is disabled or has children or someone that they care for, they may be able to get additional financial support. Find out more about this by visiting: https://www.gov.uk/student-finance/extra-help
Disabled Students Allowances (DSAs)
As a higher education student living in the UK, you can apply for Disabled Students Allowances (DSAs) if you have:
- a physical or mental impairment
- a long-term health condition
- a mental health condition
- a specific learning difficulty, such as dyslexia
DSAs are awarded on top of other student finance and don’t have to be repaid. Assessment is entirely needs-based and isn’t measured against income. Also, there’s no age limit. DSAs are given purely to cover the cost of support you need as a disabled student. They’re typically used to pay for specialist equipment and nonmedical helpers – like a note-taker or reader.
If you’re taking an undergraduate course and you’ve been in Local Authority care you can apply for financial help in the form of:
- A bursary from your university or college
- A one-off bursary and other financial support from your local authority
Contact your personal adviser, social worker or case worker at your local authority to apply.
Students in financial hardship
You might find support you can apply for once you’ve started a course:
- Access to Learning Fund in England
- Support Funds in Northern Ireland
- The Discretionary Fund in Scotland
- The Financial Contingency Fund in Wales
Who gets what and how much is decided by individual course providers – contact the student services department at your course provider. Students with disabilities are one of the priority groups for this support.
How do loan repayments work?
Repayments are calculated at 9% per year of whatever they earn above £21,000 (or – for Scottish and Northern Irish students – £15,575) and are repaid direct to the Student Loans Company by the employer as part of the normal monthly salary deductions.
The MoneySavingExpert web site has a repayment calculator for English students.
- earning below £21,000 – they won’t have to pay back anything
- earning £25,000 – they’ll pay back £360 a year, £30 a month or £6.92 a week
- earning £30,000 – they’ll repay £804 a year, £67 a month or £15.46 a week
NB: these repayment rates are the same regardless of the amount borrowed.
Interest rates on student loans are still low in comparison to other loans on the market so you should never borrow to cover your child’s tuition fees.
For English and Welsh students, the interest on earnings below £21,000 tracks the Retail Price Index (RPI). On the chunk of earnings between £21,000 and £41,000 the interest rate gradually rises in steps from RPI to a maximum of RPI plus 3%.
After 30 years, any outstanding debt your son or daughter still owes is written off, even if they haven’t had to pay anything during some of that time (because they weren’t working or were earning below £21,000).
A review into university funding in 2010 estimated that around 60% of graduates won’t have paid their full loan back after 30 years.
Because your son or daughter might not end up paying their total loan back during the 30 years before the debt is wiped out, it may not make financial sense to try and help them repay their loan early.
Does it make financial sense for your child to live at home and go to a local university?
Obviously. the total loan will be smaller this way (and therefore could potentially be repaid quicker) but don’t encourage your child to remain at home just to save money. Remember that any loan they take out will be repaid based on how much they’re earning, not on how much they borrowed.
So a graduate who lived away from home, and is now earning the same as a student who lived at home, will have the same amount deducted from salary each month. A stay-at-home graduate might pay their loan back faster, but only if they’re earning enough to pay the whole loan back.
Financial help for part-time students
In the past students on part-time courses couldn’t apply for a government loan. This has now changed and part-time students can apply for government loans to support their study provided that they study their courses at a rate of at least 25% of an equivalent full-time course in each academic year. This is known as ‘course intensity’. You can find out what financial support is available by visiting: https://www.gov.uk/student-finance/loans-and-grants
NB: Please note that while we make every effort to ensure that our information is up to date, we cannot guarantee that it will always be correct so would advise you double-check details before you make financial commitments of any kind.
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