STUDENT LOANS AND STUDENT DEBT - FACTS AND FIGURES
Who pays my university fees?
Basically, you do. Most universities and colleges charge students £3,145 per year for most degree courses. Luckily for you, this is not payable up front. The Government pays the tuition fees on your behalf, in the form of a fees loan. You pay this back but only when you have finished your course and are earning more than £15,000 per year.
What is a student loan?
A student loan is a loan offered to students to help pay the costs of higher education. The key point about student loans is that they usually have a lower interest rate than other types of loans such as a personal loan. In the UK, the body responsible for loans is The Student Loans Company (SLC).
How do I apply for a student loan?
You have to apply to the Student Loan Company. You will will be asked to complete an application form. The financial situation of your parents or guardians are taken into consideration.
How much interest do I have to pay on my student loan?
The good thing about a student loan is that it is a very cheap form of borrowing. In fact technically you don't actually pay any ‘real' interest, because the interest rate is set at the rate of inflation. For example in the year 2007-08 the interest rate for a student loan is is 4.8%. So really, you only ever pay back what you borrow. So in fact the Government prefers us to think of student loans in terms of an investment rather than a conventional loan.
What happens about my student loan when I graduate?
You have to pay it back of course! But it's not that bad. You only have to start repaying the loan when you earn more than £15,000 a year and repayments are collected through the tax system. So hopefully, you will hardly notice it.
So how much will I actually have to pay each month?
It depends on your personal circumstances, but repayments are usually around 9% of your total income above £15,000.
What happens if I don't want to work immediately after finishing university or college - say I want to go traveling for example?
No problem - there's no requirement to pay back the loan until you are earning over £15,000.
What happens if I lose my job?
If your earnings fall below £15,000, then your repayments will stop. This makes it easy if you want a career break or are in between jobs.
How long after graduating will I have to repay my loan?
There's no time limit. You pay back the loan gradually, depending on your earning power. The average time to repay a student loan is 13 years.
What happens if I want to apply for a mortgage while I am still repaying my student loan?
The Council of Mortgage Lenders says that an existing student loan is unlikely to have any affect on an application for a mortgage (if you can ever earn enough to by a house!).
What is bad student debt? What about my other debt, including my student overdraft and credit cards?
If student loans can be considered 'good' because they are a very cheap way of borrowing money, what is 'bad' debt? Well this includes student overdrafts and credit cards. These are completely unrelated to student loans and can be called in by your bank at any time. You need to try to avoid this type of debt, and if you cannot avoid it, you should pay it off as soon as possible.
When I start university, can I apply for a student grant as well as a loan?
Grants of £2,765 are available to college and university students whose families have income of under £17,910. Smaller grants are available to students where the family income is under £38,330.