If you’re about to head off to university, or are making plans to go next year, you’ll likely be thinking about money. There’s no doubt about it, university can be expensive and taking out a loan can be a daunting prospect. That’s why our team at Wizzcash have come up with this handy guide to tell you everything you need to know about student loans before you go.
Why Do People Take Out Student Loans?
For most people, student loans are essential in order for them to go to university. University fees have risen around the country, most universities are charging £9,250 per year for full-time courses. That adds up to a shocking £27,600 for three years of university education! For degrees with a placement year, this cost increases as students’ courses run for an additional year.
On top of high tuition fees, most students move away for university so they get the full experience. Living costs can be very high, particularly when students are only able to work part time hours to fit around their studies. As well as halls or private rented accommodation, which can cost almost £5,000 a year, students have to spend money on their food, transport and clothes. This is without even considering the staggering cost of textbooks, phone bills and laundry- which adds up to around £2,000 a year.
University is all about learning, meeting new people and trying something different but going out and joining clubs or societies are other expenses to add to the list. For this reason, most students take out a student loan to give them access to higher education and enable them to fully enjoy the university experience.
What Type of Loans Are Available
There are two types of student loan currently available to cover these costs, both of these are provided by the Student Loans Company and must be paid back in the future.
A tuition fee loan of up to £9,250 is available to cover the costs of your university education. This is paid directly to the university, so you never see the money yourself. The benefit of this is that you don’t have to worry about making payments on time every year.
Maintenance loans of up to £10,702 are available. This money is designed to cover the cost of living, including your accommodation and food. Most students receive less than the maximum but the full amount may be granted to London-based students as living and accommodation costs are higher in the city. The amount you are entitled to is based on a variety of factors, including your parents’ income and the location of your university.
Student Loan Myths Busted
There are a lot of common misconceptions about student loans, from interest rates to repayment, we’ve busted some of those myths to help you better understand the truth about student loans.
How Do I Apply?
The student loan application process is relatively straight forward but it can be time consuming. There is usually a deadline for applications to be made, so make sure you complete it on time or you won’t receive your money in time for university! All applications are made using the Student Loan Company website. Students have to fill out the necessary personal details, such as where they expect to be living and decide whether they want to apply for the maximum available or a smaller amount. Remember- the larger loan you take out, the more you will have to pay back. The Student Loan Company then requires information about your parents’ income to calculate how much you are entitled to.
How Much Will I Repay?
A major concern for students who are considering going to university is how much they will have to repay. The good news is that you don’t have to start repaying your loan until you are earning over £21,000 per year. For most students, it takes a year or so in their chosen industry to reach this level. However, this can depend on your degree choice. Once you start repaying your student loan, it will be broken into monthly payments which are calculated as 9% of your earnings. You don’t need to do anything to begin making repayments; the money will be automatically deducted from your payslip. If, for any reason, your earnings fall below the minimum repayment amount your payments will stop.
How To Reduce Debts
Student debt can be worrying but don’t let it put you off attending university. There are several ways you can reduce the amount you owe, including finding a suitable part-time job and learning how to manage your money. As university is the first time most people have lived away from home, and been responsible for their own finances, it’s important to make sure you create a budget and stick to it. It’s a good idea to see if you are entitled to other financial support, such as university grants and bursaries which will provide you with extra money that you don’t have to repay.
Student Loan Facts
These fun facts show you the reality of student loans and debt in the UK. Most adults end up repaying their loan throughout their lifetime but high percentages of people also have their debt cancelled before they can pay it off. It’s up to you whether you go to university and take out a student loan, but at least now you know everything you need to!