Money, a student's first test
THE moment of truth arrives in thousands of households this week and nerves are strained to snapping point. A-level results will be published and, depending on grades, school-leavers will choose their universities for the autumn.
But after the euphoria of exam success comes the harsh reality of financing the cost of at least three years' study. While some have parents who are happy to bankroll them, many students will have to meet their education bills themselves through part-time work and loans.
With tuition fees alone rising to as much as £3,000 a year from next month, the majority of students are expected to use a new package from the Student Loan Company to defer payment of this bill. Those who do not take this option must pay their fees upfront each year.
Under the loan scheme, students will be able to borrow enough to cover their annual tuition fees, with payments made direct to the university by the SLC.
On top of the tuition fees loan is a maintenance loan to help with accommodation, books, travel and so on. Payments are made each term into students' bank accounts.
Both loans allow students to defer making repayments until at least the April after they leave university --including those who drop out - but only when they start earning £15,000 or more a year.
Interest starts clocking up as soon as the loan is issued at a rate set annually and based on the Retail Prices Index - currently 3.2% but dropping to 2.4% in September - far cheaper than bank personal loans, which start at about 6%.
From September, the maximum annual maintenance loan is £6,170 for students living away from home and studying in London, £4,405 outside London, and £3,415 if living at home.
The loan amount is cut in the final year because it is not intended to be used for support after graduation. All students can borrow 75% of the maximum amounts, no matter the level of their family income. The remaining 25% is means-tested.
Because the loan rate is set at the Retail Prices Index, graduates effectively pay back exactly what they borrowed, with no profit taken by the SLC. This makes it an attractive proposition, even for students who do not need a loan to finance their studies. The SLC says 81% of students opt for the loan.
Source: http://www.thisismoney.co.uk/saving-and-banking/student-finance/article.html?in_article_id=411702&in_page_id=52&ct=5
But after the euphoria of exam success comes the harsh reality of financing the cost of at least three years' study. While some have parents who are happy to bankroll them, many students will have to meet their education bills themselves through part-time work and loans.
With tuition fees alone rising to as much as £3,000 a year from next month, the majority of students are expected to use a new package from the Student Loan Company to defer payment of this bill. Those who do not take this option must pay their fees upfront each year.
Under the loan scheme, students will be able to borrow enough to cover their annual tuition fees, with payments made direct to the university by the SLC.
On top of the tuition fees loan is a maintenance loan to help with accommodation, books, travel and so on. Payments are made each term into students' bank accounts.
Both loans allow students to defer making repayments until at least the April after they leave university --including those who drop out - but only when they start earning £15,000 or more a year.
Interest starts clocking up as soon as the loan is issued at a rate set annually and based on the Retail Prices Index - currently 3.2% but dropping to 2.4% in September - far cheaper than bank personal loans, which start at about 6%.
From September, the maximum annual maintenance loan is £6,170 for students living away from home and studying in London, £4,405 outside London, and £3,415 if living at home.
The loan amount is cut in the final year because it is not intended to be used for support after graduation. All students can borrow 75% of the maximum amounts, no matter the level of their family income. The remaining 25% is means-tested.
Because the loan rate is set at the Retail Prices Index, graduates effectively pay back exactly what they borrowed, with no profit taken by the SLC. This makes it an attractive proposition, even for students who do not need a loan to finance their studies. The SLC says 81% of students opt for the loan.
Source: http://www.thisismoney.co.uk/saving-and-banking/student-finance/article.html?in_article_id=411702&in_page_id=52&ct=5
posted by bradley at 6:40 PM
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