Student loans: What you should know
With the rising cost of university, studying beyond college is starting to become for the privileged only unless you are willing to rack up thousands of pounds of debt with little reassurance of a job when you graduate.
All UK full time higher education students are eligible for a government funded loan while they are studying. Over one million student loans are granted each year and the average student leaves university owing £27,000.
Are student loans the right choice or simply the only choice for students today?
Student Loans Company
The Student Loans Company is responsible for administering all loans and grants on behalf of the government. An application form must be submitted and then is assessed by the Student Loan Company. There are currently two types of loan that students can apply for:
The tuition fee loan
This loan is specifically given to pay for your tuition and is forwarded to your university directly to cover your university’s fees.
The maintenance loan
This loan is given to ease the pressure of the penniless student life and help with your day to day living costs. In England and Wales it is paid into your bank account in 3 instalments in line with term time however in Scotland this is paid monthly.
The Student Loan Company assesses your eligibility for a loan in two parts: Guaranteed Eligibility and Income Assessed Eligibility.
Students in England and Wales are automatically entitled to 75% of the total loan available with eligibility for the remaining 25% being means tested against you or your provider’s income (Income Assessed). The full loan available is around £11,000 each year if you live away from home and go to uni in London. Check out the current amounts here.
While you are a full time student in higher education you do not need to worry about repayments. Once you have graduated (or left) university you will receive a statement each year of your student loan account balance and any interest charged from the Student Loans Company. You are only required to start making repayments once you are employed and earning above a certain amount. Deductions are automatically taken from your wages like your National Insurance and PAYE, and are detailed on your payslip.