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Student finance

Fees and loans for students

Student finance is surrounded by myth and misunderstanding. The Government's decision to introduce variable tuition fees horrified many people who might be surprised to learn that only about half of students will have to pay fees.

Fees
From September 2006 universities and colleges in England, Wales, Scotland and Northern Ireland will all have different arrangements when it comes to charging fees. For England, Wales and Northern Ireland the maximum fee is £3,000 and for Scotland £1,700 unless you are doing a medical course in which case it is £2,700. Existing students will not be asked to pay variable fees. Instead, their fees will be capped at up to around £1,200.

From September 2006 eligible full-time undergraduate students will not have to pay fees before they start university or whilst they are studying.

Instead eligible students will be able to apply for a Student Loan for Fees to cover these costs. This means that they won't have to find the money before they start their course or whilst they are studying, and the fees will be paid direct to the their university or college, on their behalf. Students will repay these loans once they have left university and are earning over £15,000.

Maintenance grants and loans
From 2006, new full-time students from lower income households will be eligible for the new non-repayable Maintenance Grant which is worth up to £2,700 a year. How much a student will get will depend on their income and that of their household. If that income is

£17,500 or less they will receive the full £2,700 grant.
A partial grant will be payable where household income is between £17,501 and £37,425.

Around half of all new full-time students are likely to be eligible for a full or partial grant. Grants are payable in three instalments - one at the start of each term. Up to £1,200 of the new grant will be paid in substitution for part of the student loan for maintenance.

Student loans to help with living costs are available. They attract a very low rate of interest - at inflation levels. This ensures that the value of the loan that is repaid remains the same in real terms as the amount borrowed

How to apply for help
If you're based in England the first stage in obtaining "student support" (a contribution towards tuition fees and a student loan to help with living costs) is to obtain an application form from your Local Education Authority (LEA), school or college or the Government's website. When you've completed the form the LEA will tell you how much, if anything, you need to contribute towards fees and the maximum amount of student loan you can borrow. The LEA will give you a Loan Request Form which you should send to the Student Loan Company telling them how much you want to borrow.

The company, which is subsidised by the Government, offers a cheap way of borrowing money. Interest rates are linked to inflation so you only end up paying back the real value of what you've borrowed - rather than the much higher rates on offer from banks.

The amount you can borrow depends on three main factors: your parents' income and savings; where you will be studying and whether you will be living at home. The maximum loan for the academic year starting this autumn is £4,405 for students living away from home; £6,170 if you're studying in London and living away from home and £3,415 for students living at home. Any student - regardless of other income - can apply for seventy-five per cent of the maximum loan.

Paying back the loans
Repayment is also linked to how much money you earn after you leave college. The higher your salary the more money you pay back. Repayments start the April after your course ends, but only if you are earning more than £10,000 a year. If your income falls below this repayments stop.

The amount you repay is calculated at nine percent of your income and you won't need to pay anything until you start earning £15,000 a year. Your employer deducts the money from your salary, or if you're self-employed you make the repayment when you fill in your tax return.

Starting college is a good time to open a bank or building society account. Don't automatically stick with the bank you had as a child or the one your parents use and don't be tempted by "freebies" such as CDs or book vouchers. The following are much more important: other services such as credit cards (check the fee) and insurance cover; the limit on an interest-free overdraft and whether it's set up automatically; if the bank sends you an e-mail alert if you're near your overdraft limit; whether the bank will increase your overdraft in an emergency such as if your student loan is late.

Useful links

Department for Education and Skills - www.dfes.gov.uk

Student Loan Company - www.slc.co.uk

Department for Employment and Learning for Northern Ireland - www.deni.gov.uk

The National Assembly for Wales - www.wales.gov.uk

Student Awards Agency for Scotland - www.student-support-saas.gov.uk

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