In the UK, an in few other developed countries, students can borrow loans for paying their tuition fees and living costs. You may be eligible for grants and bursaries depending on where you live, which university you want to enroll into, and what are your circumstances. Currently, the maximum tuition fee that a university can charge in the UK annually is set at £9,250 for 2017.

Your tuition fees or course fees will also depend on your location. Some areas such as in Scotland, Wales and Northern Ireland, a student may be eligible for part or full financing of their undergraduate course in a publicly-funded institution.

You can also apply for tuition and maintenance loans if you plan to enroll in a private or privately funded university or if you want to pursue your post-graduation as a part-time student in UK. As different funding rules apply for such cases, you should reach out to your country’s student finance agency for more details.

Tuition Fees

Tuition fees in UK universities and colleges have jumped exponentially in the last decade. In 2011, the most universities could charge was £3,375. In 2017 they can charge you up to £9,250. There is a variation in the maximum fees for each country in the UK and also course fees for international courses, private institutions and postgraduate courses differ.

The table below illustrates the maximum that public universities can charge in 2017 in the UK for undergrad courses. The fees differ according to which country you’re living when you apply:

Students Living In Studying in England Studying in Scotland Studying in Wales Studying in Northern Ireland
England £9250 £9000 £9000 £9250
Scotland £9250 Free £9000 £9250
Wales £4,296 £4,296 £4,046 £4,296
Northern Ireland £9250 £9250 £9000 £3925

Though, the loan that covers your tuition fee is the biggest one, there are other costs to consider as well. Even if your tuition fee is fully paid up, there are extra costs such as books, stationary, printing, photocopy, lab materials, costs of field trips, presentations and more.

Living Costs or Maintenance Costs

Living costs can be the biggest drain on your pocket if you’re studying in another country. The good news is that you can get a maintenance loan to cover those expenses. While the tuition loan is credited directly to your university’s or college’s bank account, maintenance loans are paid directly to you. Yay!

But just because you have years to repay that money, don’t think you should be spending it unwisely. Be responsible. Being responsible with money (yours or others) can mean the difference between success and failure in life.

Maintenance loans are income contingent. Meaning it depends upon your household income—the lesser the income, the more you can get or apply for.

Let’s take a look at how much a full-time student is eligible for in England:

Household Income Maintenance Loan
£25,000 £8,430
£30,000 £7,825
£35,000 £7,220
£40,000 £6,615
£45,000 £6,009
£50,000 £5,404
£55,000 £4,799

The New Fees System in the UK – In a Nutshell

The news and noise surrounding the new fee system is deafening and is causing a lot of confusion among students. With lot of untrustworthy sources of information available in the web, students are misguided and end up making the wrong decisions.

The below points busts any myth and breaks down the facts into tiny nuggets of authentic information that will stand useful for any student looking for student finance in the UK.

  • The maximum universities can charge for tuition fees in 2017 is £9,250. That’s almost a three-fold increase on 2011.
  • Full-time English students can apply for a maintenance loan of £8,430 (more for London) which covers basic living costs.
  • Students do not pay a penny until they graduate and earn £21,000 pa. Repayments are then 9% of anything above this.
  • The average university graduate will be saddled with a student debt of £48,000.
  • After 30 years any outstanding student debt is written off.
  • Interest is charged at the rate of inflation +3% pa whilst you are at university, which continues at 0-3% pa thereafter (depending on your salary).
  • Your student loan repayments are automatically deducted from your paycheck by your employer.
  • Funding and support is available for a good proportion of students, but especially those from lower income families.

Student Finance

Let’s now turn to the primary subject of this article, Student finance. So, what is student finance?

Student finance is simply the way that you fund your university education. The vast majority of us take up the offer of a student loan from the government. You may also be eligible for grants and other funding.

Understanding Student Finance

The whole process can be pretty confusing! There’s lots of jargon, over-complicated applications and mysterious repayment clauses. Most of the confusion, unfortunately, comes from popular misconceptions, with media spins and embellished rumours amongst friends.

Who to believe? Well, hopefully we’ll clear everything up for you here based on the facts. You will then be in the best position to manage your future finances and avoid any surprises.

While you’re a student you’ll have two main costs – tuition fees and living costs. You can apply for student finance to help with both!

Tuition Fee Loan

Helps you pay the tuition fee that your university or college charges. How much you can get doesn’t depend on your household income.

Maintenance Loan

Helps pay for your living costs while you’re studying. Most of the Maintenance Loan doesn’t depend on your household income but you can apply for more that does.

Disabled Students’ Allowances

If you have a disability, including a long-term health condition, mental-health condition or specific learning difficulty, including dyslexia or dyspraxia, you might be able to get extra help.

Dependents’ Grants

If you have a child or an adult who depends on you financially, you can get help with the extra costs you might have.

Bursaries and scholarships

Your university or college might offer you a bursary or scholarship. This isn’t always money – it could be a discount, for example on your fees or accommodation costs.

When should I apply for Student Loan?

Students have to apply for student finance every year of study and before the deadline. These differ depending on where you’re from.

English & Welsh: May for new students, June for current students.

N. Irish: April for new students, June for current students.

Scottish: End of June.

Missing this date is likely to lead to delays in receiving your first instalment in September, which can make for a tricky Fresher’s week. So getting your application in early is the first thing to get right!

How to Apply for a Student Loan in the UK

How to Apply for a Student Loan in the UK

  1. Go to the Gov.uk website (https://www.gov.uk/apply-online-for-student-finance).
  2. Register using your personal details, create a password and setup the security questions.
  3. You will be given a unique Customer Reference Number (CRN). Make a note of this along with your Student finance login details as you will need them.
  4. Follow through each page of the application. If you need to come back to it, remember to save your progress!
  5. Enter your passport number to verify your identity. Doing this means you don’t need to send your passport.
  6. Check your application for any mistakes and then submit the final page.
  7. You are able to make changes and check on the progress of your application at any time by using your CRN and student finance login details.
  8. If you have any queries or problems, contact Student Finance on 0300 100 0607 or via the website.

Repayment of Your Student Loan

At some point after graduating you will start repaying your student loan. Whilst this may be some way off, it’s worth thinking about now. The loan comprises both the tuition fee loan and maintenance loan provided by the Student Loans Company (SLC) during your university years. Unlike the student loan, most other student funding available comes with very few, if any, strings attached.

Graduates are expected to leave university with an average student debt of £48,000. That’s quite a frightening number, but it’s really important to know that you only have to start repaying your student loan once certain conditions are met. We’ll get to these below.

When do I have to repay my loan?

There is no one time when you are required to repay your student loan in full. Most British students only have to start repaying their student loan once earning over £21,000 a year (previously £15,000).

Even then, your repayments are barely noticeable. You have to repay 9% of anything above the £21,000 threshold on your outstanding loan. This amount is automatically deducted from your pay cheque every month, depending on your actual salary. The more you earn, the bigger the chunks you repay.

This is a pretty fair system because you only have to repay what you can afford, and it is independent of your total student debt. For example, two students on the same salary but who had tuition fees of £9,000 pa and £7,000 pa respectively, will repay the same amount in monthly instalments. The only difference is that the student with higher fees will take more time overall to clear the total student debt.

Most graduates hit the £21,000 threshold within a few years of graduating. However, hypothetically speaking, if you don’t exceed a £21,000 annual salary for 30 years you will never have to repay your student loan. Any remaining student debt after this time is written off.

When Should You Repay?

The quick answer is really the same as above: only when you have to, which is typically in small instalments deducted automatically from your income once over £21,000 a year. In most cases it’s not worth paying off your student loan early.

When Should You Repay Student Loan?

Almost 80% of grads under this new system will not earn enough to pay off their whole loan before it’s wiped. If you pay it off early you could end up clearing debt that you may have never had to clear. And it’s by far (even under the new system) the cheapest form of borrowing money.

For lots of us, there’s a good chance we’ll need to take out a commercial loan or mortgage soon after graduating. These are much more expensive forms of borrowing than a student loan. If you have spent your savings on repaying your student loan early, and then need to take another loan, you’re likely to be worse off overall.

3 Things You Should Watch Out For

  1. Interest is charged on top of inflation

    Under the previous student finance system, ‘interest’ on loan repayments was set at the current rate of inflation (using the RPI at one point in the year). In theory, there was no interest as your wage is broadly expected to increase at the same rate.

    Unfortunately with the new system introduced from 2012, interest will be charged on top of inflation. This will affect most new students in two ways:

    • Whilst at university: An extra 3% in interest is added to the rate of inflation (RPI), which changes slightly each year. This applies until the April following your graduation.
    • After graduating: If you earn under £21,000 pa then your interest rate will be set at 0%, not accounting for inflation (as with the old system). For every additional £1,000 you earn, you will be charged an extra 0.15% pa in interest on your student loan. Graduates who earn in excess of £41,000 will incur the maximum 3% interest rate.
  2. You pay tax on your initial salary

    Even though student loan repayments are deducted from your pay cheque, income tax is calculated and paid based on your actual salary amount. In other words, income tax and student loan repayments are calculated from the same original figure.

  3. Repayment conditions can change at any time

    Some economists have noted that the British government is able to make changes to the student loan repayment conditions at any time, even if you have already graduated. There is nothing in the agreement you make with the Student Loans Company (SLC) which guarantees the 9% repayment rate or indeed the salary threshold.

    Whilst there’s not much you can do about this if the terms did change, it’s worth knowing about in case you consider long term plans based on current figures.

What to do with the money

Hopefully you’ve now got a really good grasp on how the whole student finance process works which, whilst being a little drab, is really important. From here on in, we’re going to get much more into the practical side of things, starting with what the heck to do with the money you do have available.

All students need a bank account to enable the unrivalled joy of receiving their student loan instalment. You’re likely to already have a current account, but being a student can bring a number of perks when it comes to banking.

We’ll start by taking a look at some of the key features of student bank accounts and how to choose the right one for you. Things change slightly when you graduate, and so we’ll also be touching on the subject of graduate bank accounts.

Then we’ll confront the thorny issue of credit cards and how (for some students) they can be worth having whilst at university. Controversial, we know, but lots of important lessons all the same.

Finally we’ll move on to choosing and using savings accounts as a student. “But”, I hear you cry, “don’t you need lots of surplus money to save? Because I don’t!”. Many students are resigned to thinking that there’s no point in saving whilst at university, but there will be times when you are able to save and we’ll show you how you can easily maximise the money you do have.

The Truth About Student Bank Accounts

Students are a banker’s dream. If they manage to sign you up as a customer with them at this age, then there’s a high chance of you staying with them for life. Banks also know that students are likely to take up the offer of having an overdraft to fill in the inevitable financial void. Once you understand that the banks really, really want you, then you soon realise that you have the power to make a life choice for yourself.

There are a number of incentives that the banks will use to lure you. This is when you’ve got to get financially savvy and look at the bigger picture. Choosing the right student account can really help you out during your university years.

The below comparison takes into account a number of different factors which should always be considered when choosing an account. Let’s get right into the details below.

It’s worth noting that, for some students, branch location, internet banking and the level of customer service are also important considerations (though we’d suggest these should not necessarily be deciding factors).

How much is the freebie worth?

Give any freebies a cash value to make it easy to compare with the other benefits on offer. Whilst a mug with an inbuilt USB memory stick might be useful it’s not going to be worth that much and if you really want it, then you’re probably better off buying it yourself. What you really want to look at is...

What overdraft is available?

Ok, so this should be the most important factor to consider when choosing a student bank account. Yes, simply because the unique thing about these accounts is that you can borrow money for the length of your degree with no interest (0%), so long as it is an arranged overdraft.

Of course you’ve got to be careful here because you will have to repay it all soon after graduating to avoid high interest rates. This is where the banks recoup their investment in students, so budget accordingly and only spend of it what you really need. Overdrafts should be treated as a safety net, and definitely not as ‘free money’!

4 key questions to consider:

  1. Which banks offer the largest advertised overdrafts?
  2. Is the overdraft amount guaranteed?
  3. How is the overdraft tiered over the years?
  4. When will you have to pay it back?

A common question we get from students is how the banks go about deciding on what level overdraft you can get. There are a number of factors, including your age, where you live and your financial history.

Using plastic to your advantage

Most students don’t have a credit card, and often with good reason. Being in the belly of a recession, we are constantly warned of the dangers of borrowing money in this way.

But there are some real benefits to having a credit card even at university. Some banks actually offer ‘student credit cards’ as a distinct product.

The absolute key point is that you must have real discipline and be smart in the way you use it. Student credit cards typically come with high interest rates (around 24% APR), so you have to be careful. But, if you are sensible, you can easily avoid being in long-term debt and actually boost your finances.

Remember! Credit cards are not for everyone. Before we explain the benefits of having one, do not consider applying for a credit card if you:

  • Are poor at managing your money
  • Want to use a credit card as an extra source of income
  • Plan to use it to get out of any existing debt

5 benefits of having a credit card

  1. Improve your credit rating

    Most students don’t have a high credit rating score, which is fine while at university. However when it comes to applying for loans and mortgages in the future, your credit rating plays a big part. Having a credit card can help build up your credit rating so long as you never make a late payment. Your credit rating improves even when you don’t use it, so if you don’t trust yourself with it, simply apply for one and cut it up!

  2. Online payment protection

    Using a credit card for any purchase over £100 online protects you not only from fraud, but can also enforce a refund from your card supplier if a product or service is inadequate (under section 75 of the Consumer Credit Act, 1974). Debit cards do not offer this guarantee.

  3. Emergency short-term funds

    This should not be a reason for applying for a credit card, but can be a benefit nonetheless. Most credit cards give you at least 56 days without charge (0%) on new purchases. So long as you have income to repay the total amount within this period then you can benefit from this time lag.

  4. Build good habits

    Having a credit card as a student can improve your spending habits and wider management of your personal finances. Again, this comes down to having some discipline which is developed through practice.

  5. Rewards

    Certain credit cards may offer you other benefits, such as cashback on purchases or Air miles. These should be approached with caution but can be a nice perk so long as you’re never late on payments.

Watch out for the catches!

We can’t emphasise enough the importance of having a credit card for the right reasons (to improve your finances) and using it responsibly. Lots of people do get into spiralling debt. Often this is because the temptation to spend accessible money will always be there, but there are also a few tricks banks employ to catch you out. Let’s be realistic, they’re not lending you their money without profit in mind!

There are a few clauses you should be aware of when signing a credit card agreement. Failing to meet them can be very costly.

  1. Interest rate charges

    If you fail to repay any money borrowed on a credit card after the interest-free period, you will start to incur charges in the form of interest on the remaining balance. Interest rates for most student credit cards tend to be around 18-27% APR. So, check the terms and conditions.

  2. Late payment fees

    At the very least, you will have to make a minimum payment each month as detailed on your statement. If you fail to make this you will be charged a late payment fee. In any case, you should always pay off the full balance to avoid interest charges. If you ever incur a fee on your credit card, cut it up immediately.

  3. Cash withdrawals

    Never take out money from an ATM with a credit card because you will be charged for it. Only use it online or with a Chip and PIN machine. Use your cash or debit card exclusively when drawing cash.

Dealing With Debt

For most new students, getting into university means getting into debt. Full-time students don’t have the savings or time to fund their education at the point of use. This requires borrowing a large sum of money, much of it off the government as well as banks.

While there’s absolutely nothing wrong with this, lots of students are put off applying for university because of an anxiety about debt. Debt is scary, but it’s also an integral part of today’s society. Companies take loans to grow, people take on mortgages to buy houses and students take out loans to invest in their own education. There are lots of different ways to borrow money and to pay it back.

Student loans are quite unique because, unlike any other kind of commercial loan, they are designed to be affordable for everyone. Yes, most students graduate university with a large amount of debt, but the repayment terms are entirely manageable, even without any income.

There are a lot of myths, stigmas and misconceptions surrounding student debt. It’s important that they are all addressed to avoid the wrong choices being made when it comes to funding your education. Having said that, debt can be really harmful. It’s important to make this distinction, that is, between good and bad debt.

Good debt

When it comes to student loans, you know that you only have to start repaying the Student Loans Company when you reach a decent salary. From 2012 students effectively have 30 years to repay it after graduating before it’s written off. You can consider this to be ‘good debt’, because it’s manageable and affordable.

As with other borrowing, you will still have to pay some interest on your student loan. However, as the interest rate is relatively low and linked to inflation, a student loan is by far the cheapest form of borrowing.

More importantly, you only have to pay back what you are able to afford. Your repayments are intrinsically linked to your income: the more you earn the more you repay. Unlike commercial borrowing, your credit rating is unaffected by your student loan.

Bad debt

Most people who get into ‘bad’ debt have borrowed money without much thought about how they will repay it over a certain period. Before borrowing money from anyone, you must have a clear plan to repay the loan within a certain timeframe.

Credit cards and bank loans are prime sources of bad debt since the repayments are lumbered with high commercial interest rates and strict conditions.

Most students will have an interest-free overdraft with their bank account, and some may even have a credit card. These are both fine (good debt) so long as the money borrowed is used responsibly. This requires a certain personality and discipline. ‘Good’ debt can quickly turn bad and get progressively worse if you don’t have a plan to pay back the money in the short-term.

Warning: Do not even touch a credit card if you cannot afford the money you are borrowing!

Money Saving Tips

Finally, we would like to end with a list of money saving tips. These are not just money-savers but life-savers when you’re working on a shoestring budget:

  1. Use cash on nights out – Leave your card at home and just take the money you can afford to spend.
  2. Don’t buy books – Use the library!
  3. Use cashback sites whenever making purchases online.
  4. Book travel in advance to get super cheap deals
  5. Wait before buying, especially big ticket items, wait a day or so before parting with your cash to avoid spontaneous spending.
  6. Buy food in bulk – Buying a bag of 10 chicken breasts is a lot cheaper than buying 2. The freezer is your friend!
  7. Use your legs – Could you walk or cycle to uni? Ask yourself if you really need to get the bus to save £100’s each year.
  8. Don’t pay for a gym – The world is your gym and the pavement is your treadmill!
  9. Chalk out a budget and stick to it through thick and thin
  10. Kick the bad habit – Whether it’s smoking or shopping, break costly habits to benefit your wallet and health.

Contacting Student Finance:

Need to contact student finance? Here are the contact details of student finance office

Student Finance Contact – England & Wales

Contact Student Finance England

Contact details for Student Finance England including complaints, appeals, the Student Finance Services Non UK Team and the Advanced Learner Loan.

Note: Parents and partners require student’s consent before Student Finance England can provide them with information.

These addresses are post collection points only - not offices.

Student Finance England

Twitter
Facebook

Telephone:      0300 100 0607
Student Finance Opening Hours:
Monday to Friday, 8am to 8pm
Saturday and Sunday, 9am to 4pm

Textphone:      0300 100 0622
opening hours:      Monday to Friday, 8am to 4pm

Postal Address:
Student Finance England
PO Box 210
Darlington DL1 9HJ

EU students

Student Finance Services Non UK Team

Twitter
Facebook

Telephone:      0141 243 3570
From outside the UK:      +44 (0)141 243 3570
Opening Hours:      Monday to Friday, 9am to 5:30pm

Address:
Student Finance Services Non UK Team
Student Finance England
PO Box 89
Darlington DL1 9AZ

EEA citizens working in the UK

Telephone:      0300 100 0607

Opening Hours:
Monday to Friday, 8am to 8pm
Saturday, 9am to 4pm

Textphone:       0300 100 0622
Opening Hours:      Monday to Friday, 8am to 4pm

Address:
European Economic Area (EEA) Migrant Worker Applications
Student Finance England
PO Box 89
Darlington DL1 9AZ

Postgraduate Loan

Telephone:      0300 100 0031
Opening Hours:      Monday to Friday, 8am to 6pm

Address:
Student Finance England
PO Box 210
Darlington DL1 9HJ

Advanced Learner Loan

Telephone: 0300 100 0619
Opening Hours:
Monday to Friday, 8am to 8pm
Saturday, 9am to 4pm

Address:
Advanced Learner Loan
PO Box 302
Darlington DL1 9NQ

Student Finance Complaints:

In case you want to make a complaint towards student finance, please use below contact details:

Contact the Student Loans Company if you have a complaint.

Student Loans Company

customer_complaints@slc.co.uk
Telephone:      0300 100 0601

Appeals – Student Finance England:

If you are not agree with a decision, you can request to Student Finance England asking them to review their decision about whether you can get financial help and if so how much.

Read the guidance and complete the application form.

Download ‘Student Finance England - how to appeal’ (PDF, 98KB)
Download ‘Student Finance England - appeals form’ (PDF, 42KB)

Send the completed form by email or post to Student Finance England.

Student Finance England

formal_appeals@slc.co.uk
Formal Appeals
Student Finance England
Memphis Building
Lingfield Point
PO Box 226
Darlington DL1 9GA

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