What support is available towards university costs? (Student loans and maintenance grants)

Student Loans
The purpose of a student loan is to help cover the costs of your tuition fees and basic living (rent, bills, food etc). The amount to be paid back will depend on the amount borrowed plus the interest charged. Interest is linked to the rate of inflation and is adjusted each year in line with the Retail Prices Index (RPI). From 1 September 2008 to 31 August 2009 this will be 3.8%. Student loans are available to all full-time, English and EU citizens who have been resident in the UK for three years. If you do not fit in to this category, you can contact the Student Loans Company for more information.

The amount of student loan you are entitled to depends on your income or your parents' income, whether you will be living at home or in student accommodation, and if you will be studying in or outside London. At the highest level, for students living away from home at a London university or college, from a low-income background, the maximum loan is £6,475. At the very lowest level, for students who live at home with their well-off parents and go to a university or college outside London, the figure would be £3,580. This basically means that you are entitled to anything between £3,580 and £6,475 depending on various factors. Student Finance Direct provide an online calculator that gives an estimate of the amount available for tuition fees, student loans, and the Higher Education Grant depending on your circumstances. All eligible students are entitled to 75% of the maximum loan figure. Whether they can get any or all of the remaining 25% depends on the student's income and that of their parents. Your local education authority (LEA) will assess your circumstances and inform you of a total figure for the academic year.

The student loan is provided by the Student Loans Company and is normally paid by cheque or directly into your bank account in three instalments – one at the beginning of each term. Your local education authority assesses your entitlement each year, so you must remember to reapply every year of your course. Whilst the deadline for applying to student loans is the end of July, prior to university admission that autumn, it can be quite a long process so it is important to apply early to ensure you get the first instalment in time for the start of your course.

Remember a student loan is not a grant: you do have to pay it back once you have graduated and are earning over £15,000. Repayment usually begins at the start of the following financial year (the April after you graduate, if you are earning enough): your employer would be notified about your loan repayment and it will be taken from your earnings before tax is deducted. Repayments are linked to your earnings, so the more you earn the more you repay; the less you earn the less you repay. Repayments are made at 9% of earnings above the threshold of £15,000 so by example a graduate earning £20,000 a year would repay £8.65 a week or £37.50 a month.

The interest rate for Student Loans is linked to the rate of inflation in line with the Retail Prices Index: this means that the amount you pay back will have broadly the same value as the amount you have borrowed and no profit is made on the loan itself. All student loans accrue interest from the date they have been paid, and interest accrues on your loan until it has been repaid in full. The interest rate is currently 4.8% yet will drop to 3.8% from 1st September 2008. So is it worth paying off the student loan early to save on interest? No, not at the new rate. You'd be better off putting your spare cash into a top paying savings account. At 6% credit interest after tax you'd receive 4.8% on your savings, so a 1% net saving. And if you have other overdrafts/credit card debt then it's certainly not worth paying off - clear those first.

If you do not need extra financial assistance, you don't have to apply for a loan, however given they are interest free they are worth taking up, even if to just stick the money in a savings account. If you do require a student loan, you can apply online via Student Finance Direct. Click here to find the contact details for your LEA.

For more information on student loans contact:
Student Loans Company Ltd
100 Bothwell Street
Glasgow G2 7JD
Tel: 0870 240 6298
www.slc.co.uk

Variable Tuition Fees and Tuition Fee Loans
Universities and colleges offering HE courses in England will be allowed to vary the amount of fees they charge new students. Institutions can charge between zero and £3,145 per year. You will not be required to pay fees before you start your course or while you are studying, although you can do so if you wish.

You can apply for the new Student Loan for Fees to cover the cost of these fees. This will give you the advantage of not having to find this money from elsewhere, and we will pay the fees directly to your institution. You then repay the fee loan in the same way as your other student loan – only once you have finished studying and are earning over the repayment threshold of £15,000 per year.

Maintenance grant
New full-time students from lower income households will be eligible to receive a new (non-repayable) Maintenance Grant which is worth up to £2,835 a year. The actual amount you will be entitled to receive will depend upon your household income:

• Household residual income of less than £25,000: student receives full grant
• Household residual income of £25,000 - £60,005: student receives part of the grant
• Household residual income of more than £60,006: student receives no grant

Special Support Grant
A new Special Support Grant is available for new students who are eligible to receive Income Support and other means-tested benefits such as Housing Benefit. It will cover additional course costs such as books, equipment, travel or childcare that result from attending your course. The amount of support, the income assessment arrangements and the payment arrangements are the same as for the Maintenance Grant above. New students who are receiving the Maintenance Grant and gap year students are not entitled to receive a Special Support Grant.

Bursaries and other help from your university or college
Universities and colleges wishing to charge more than £2,835 a year for a course will be required to provide additional non-repayable financial support, such as bursaries, to students on these courses who are receiving the full £2,835 maintenance grant.

What this means is that students who receive the full maintenance grant and are being charged the maximum fee of £3,145 a year will receive at least £310 a year in additional financial support from their university or college. This may take the form of a bursary or some other type of financial help. The type and amount of financial help will depend on the university or college concerned.

Some students may be entitled to more than this and you should therefore speak to the university or college that you wish to attend.