Student finance advice


Read our guide on understanding university tuition fees, where the recent hike came from and what it means for you.

Find out which student bank account is best suited for your needs by comparing their overdraft terms, rates and incentives.

Make sure you don't get scammed when you surf on the internet with these pointers from the Financial Ombudsman.

Keep on top of your finances in 2012 with these pointers from the Financial Ombudsman.




Can I afford to go to university?

With the age of austerity in the aftermath of the financial crisis clouding graduate employment prospects coupled with soaring student numbers, squeezed university funding and spiralling graduate debt the financial case for university is no longer as clear cut as it was. In the latest survey by Push, students starting university in the Autumn of 2011 can expect to graduate with debts in the region of 26,000. Now with the prospect of incurring fees of up to 9,000 that number is set to soar higher. Yes, student loans and overdrafts are an inevitable outcome for most students, however the prospect of accumulating such a figure of debt should not be the key factor in deciding not to go to university.

Debt through student loans is flexible and serviceable. Following graduation no one is asked to repay until they are earning over 15,000 a year (soon to increase to 21,000) and even then repayments will be a very manageable proportion of your take home pay at 9% of anything earned above this repayment threshold. Currently no commercial interest is charged on student loans, they just increase with the general price index (or 'inflation'), and banks often give you a few years grace following graduation to repay their overdrafts. Read our guide on student bank accounts for more details.

With typically cheaper than market rate accommodation and numerous student discounts and special deals available, university life need not be expensive. By tapping funding from student loans, grants, banks and vacation work university is affordable. As a graduate you will be more employable, you'll command a higher starting salary (average around 25,000) and you'll likely move up within firms quicker than non-graduates. On balance by not starting work straight from school you could miss out on 3 years of (albeit lower) earnings, have a head start in the workplace and not be saddled with debts.

It is estimated that graduates earn on average 100,000 more than non-graduates over their working life, far outweighing the cost of three or four years of studying. However going to university should not be a black and white financial decision, it is a life experience which offers you more than simply time spent in lecture halls.

Of course you may have had enough of studying, be keen to get out in the real world, or are daunted by the financial commitment. Either way it's a big decision to mull over with tutors, friends and family. If you're not sure on whether university is for you check out Not going to uni for advice on alternative career paths for school leavers including apprenticeships and further training. If you are then read our guide on how to apply to university.



A basic student budget - this budget is meant as a guide for UK undergraduates only. Every student's financial situation will be different.

RENT 250 per month x 9 months 2,250
UTILITIES/PHONE/BROADBAND 60 per month x 9 months 640
FOOD 30 per week x 38 weeks 1,140
CLOTHING per year 275
TRAVEL approx. 30 for monthly bus pass (or 1 per journey) 270
BOOKS/EQUIPMENT variable - ask department to confirm amount 300
SOCIAL 30 per week x 38 weeks (this includes sport, leisure, refreshments, entertainment etc) 1,140
TELEPHONE/BROADBAND 30 per month 270
 
TOTAL
5,915

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

Student Loans
If you're planning on going to university as a full time student, and have been resident in the UK as an English or EU citizen for three years, then you are entitled to apply for a Tuition Fee Loan to cover your tuition fees, and a Maintenance Loan to help towards your living costs (rent, bills, food etc).
The Tuition Fee Loan covers the tuition fees you are charged for your course each year and is paid directly to your university or college - check your course details to find out what yours will cost. For the year 2011/12 the maximum amount an institution can charge is £3,375. If you are to study in Scotland then tuition fees of £1,820 or £2,895 are payable if you're studying medicine.

In addition all students are eligible to apply for Maintenance Loans however the amount you receive will depend on your parents'/household income, where you live, and where you study. The maximum amount will vary from £6,928 if you're living away from home and studying in London, to £4,950 if you're living away from home and studying outside London, to £3,838 if you're living in your family home. All eligible students are entitled to 72% of the maximum loan figure. Whether they can get any or all of the remaining 28% depends on the student's income and that of their parents.

The latest you can apply for student finance is up to nine months before the start of the academic year, this can be done through the Direct.gov website.

Paying back a student loan
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 due to rise to 5.3% (based on March's RPI). So the next question you're asking is...

Is it worth paying off the student loan early to save on interest?
Possibly, as you're unlikely to recoup that much on a top paying savings account (c. 3%) or Cash ISA (where interest is received free of tax). However if you have other overdrafts/credit card debt then it's certainly not worth paying off - clear those first as the interest rate will be significantly higher than that on your student loan. The chances are sometime after finishing university you will need to borrow for something, whether it be for a mortgage (or to save up money for a deposit), to buy a car, perhaps to setup a business. Now consider if you'd paid off your student loan quicker than you needed to, you'd now have to replace it with a more expensive form of borrowing. Considering student loans don't cost any 'real' interest (after inflation) it is worth building up your savings instead, as much as you may despise the thought of them, student loans are probably the cheapest source of finance out there.

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. Or look up the contact details of 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

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 2,906 a year. The actual amount you will be entitled to receive will depend upon your household income:

This grant will be paid in three instalments, one at the start of each term, just like your student loan.

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 3,290 a year will receive at least 338 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.



Claiming tax back on your part time earnings

If you have been deducted taxes by your employer for part time work or a student summer job and earnt less than your personal tax allowance of 7,475 for the tax year (which runs roughly to the start of each April), then you will be entitled to a refund from HMRC. To claim this back you need to file a P50 form. Alternatively make sure you don't have income taxes deducted from your wage packet by filling in a P38(S) form (available at www.hmrc.gov.uk/forms/p38s.pdf. Note you still have to pay National Insurance and therefore it is just the income tax that you can claim back. You can also claim back taxes for employment abroad, there are companies that can help you do this, and will probably charge about 10% commission for the service.

Books on managing student finances


The Complete University Guide: Student Finance (In association with UCAS)

"It has never been more important to know how to finance your studies at university. The costs of studying for a degree are rising and the risk of not keeping a careful check on your financial situation can lead to large debts that take years to pay off, affecting the rest of your life. This comprehensive guide will help the 500,000 undergraduate students who apply to university each year and their parents to: Understand how tuition fees differ within England, Scotland, Wales and Northern Ireland Get a realistic picture of all a student's likely outgoings - accommodation, food, travel, study costs, insurance and socialising Work out a sensible budget Maximize income from loans, grants and employer sponsorship. Find out how current and recent students make ends meet."


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