All UK students in all four UK countries are eligible for government-funded loans and grants administered by the Student Loans Company (SLC). Any money you borrow is at a nominal interest rate so that, in effect, you pay back no more than you actually borrowed. Interest is, however, added from the time you take out the loan even though you do not have to start paying it off until after you have graduated and are earning more than £15,000. You can, of course, pay it, or parts of it, at any time you like – you don't have to wait until reaching that magical £15,000 salary if you do not want to.
There are two types of loan from the government: a Tuition Fee Loan to cover any tuition fees you have to pay and a Maintenance Loan (sometimes known as the Loan for Living Costs)to help with your day-to-day living costs. These two loans taken together form your total student loan package and neither of them has to be paid off until after you finish your degree.
You don't have to take out student loans – although the vast majority of students do – but we recommend that you give the matter serious consideration. They are likely to form a significant part of your income, are essentially interest free and you can always put the money in an interest-bearing account where you might expect a 5% return. But remember only the Maintenance Loan will come to you; your Fees Loan will go straight to your university. Your Maintenance Loan will usually be paid straight into your bank or building society account in three instalments (monthly in Scotland), the first at the start of the academic year. But bear in mind that any payments due could take up to a week to reach your bank account so make sure you have some cash to tide you over the first few days.
All English students starting at university in 2009 will apply through a new online service called Student Finance England. And remember, you will be able to apply for student finance at the same time as you make your UCAS application.
Welsh students must apply for these loans and any grants through the local authority where they normally live, Scottish students through the Student Awards Agency for Scotland (SAAS) and those in Northern Ireland to their Education and Library Board (ELB). You should do so as soon as you have received an offer – even a conditional offer – from a university. Other EU students will usually be sent an application form by the university offering a place. New interactive online enquiry services have been introduced and these include an online application form and entitlement calculator. You can apply online or download an application form by logging onto the appropriate country website. You can also track your application by accessing the online service using a unique ID number.
The arrangements for repaying your student loans are generous and you can put this to the back of your mind until at least the April after you leave your course. And you only have to start thinking about it then if you are in work and your salary is over £15,000 a year. Thereafter, repayments will be deducted through the tax system at the rate of 9% on that part of your income over £15,000 a year so, for example, at a salary of £20,000 before tax your monthly repayment would be:
£20,000 - £15,000 = £5,000 x 9%
= £450 a year or £37.50 a month.
Should your income fall below £15,000 (by, for example, leaving paid work to start a family or undertake voluntary work) then repayments would stop. Unlike a commercial loan, how much you repay each month is determined only by your income, not by how much you owe. In addition, the government has agreed to write off any loans outstanding after 25 years so most of you could taste freedom before you are 50! Finally, those of you starting repayments in 2012 or beyond will be able to take a 'repayment holiday' of up to five years but this will, of course, be added to the write off period. This is designed to help graduates who might need additional money to buy a house, move to a new part of the country for work, get married or start a family.
