The Big Fat Guide to Student Finance 2016
Student Finance got your head in a spin? Let us put you straight! We’ll show you where the money is and – crucially – how to get your hands on it.
Getting to grips with Student Finance might sound as appealing as Katie Hopkins on a crisis hotline, but it boils down to this: going to university is pricey – but there’s lots of cash out there to help you.
Unfortunately, not only is some of that cash really well hidden, ever since the 2012 £9,000 fees hike the rules about who gets what keep changing!
Why bother reading this guide?
Save the Student has been following the student loan changes for years, petitioned against higher fees, created the first ever student loan calculator for the new fees and commented in countless newspapers from the very beginning of the recent shake ups.
By no means do we support charging uni fees but we believe it is vital that the myths are debunked and students are aware of the facts.
Are student loans as bad as many make out? What do they mean and how might they affect you? Is it even worth going to university anymore?
Checking out the info on this page will mean you’ll be less confused about undergraduate uni costs, more confident about getting the funds you need, and have a better idea how much the whole shebang’s going to set you back. Read on.
What’s on this page?
Student finance is never a simple topic to cover (well, except when uni was free!). On this page we’ll touch only on the most important things students need to know. But if you’re struggling to find the will to digest it all right now, here’s a quick summary:
- The maximum universities can charge for tuition fees in 2016 (and since 2012) is £9,000. That’s a three-fold increase on 2011
- Full-time students starting in 2016 can apply for a max maintenance loan of £8,200 depending on household income (more for those in London)
- The maintenance loan is not enough to live on for most students so you could need extra income or to learn to live on less
- The average university graduate will be saddled with a student debt of around £48,000
- You do not pay a penny until you graduate and earn £21,000 per annum. Repayments are then 9% of anything above this.
- 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 deducted from your paycheck by your employer
- Maintenance Grants are still available for current students that started uni before 2016 (as they receive a smaller loan)
- Other grants and funding are available for new starters in 2016 for those with disabilities or dependants, or from low-income backgrounds
- There are differences between systems in England, Wales, Scotland and N. Ireland
- Whilst the real cost of university education for some is tripling, some students will also be better off under the new system (see our calculator).
Keep reading to get a clearer understanding of what the charges – and the finance on offer – means for you.
Credit: imgflipThe most that UK universities can charge for tuition in 2016 is a hefty £9,000 a year. If that sounds a lot, it is – especially when you consider that in 2011, the most they could charge was £3,375 (jump back a few more years, and tuition was free…). However, unless you’ve got a souped-up DeLorean, £9k is where we’re at.
That said, there’s a bit of variation. Each country in the UK sets its own maximum. Not all universities charge the full Monty (though most do). International/postgrad courses, and private institutions, also have different fees.
Differences across the UK
Here’s maximum that public universities can charge in undergrad fees, depending on where you live when you apply:
|Students from||Studying in England||Studying in Scotland||Studying in Wales||Studying in N Ireland|
BUT, if you’re entitled to Student Finance:
- In Wales, there are fee grants for Welsh/EU students which effectively cap tuition costs at £3,900 (the Welsh Government pays the rest).
- In Scotland, you can get free tuition at Scottish unis. Study elsewhere and you can be charged full whack (but with access to Student Loans to pay for it).
- In N Ireland, you can be charged up to £3,925 (unless you study elsewhere in the UK).
- In England, you kinda get the thin edge of the wedge: it’s up to £9k wherever you study, and you can’t claim EU status over here!
- EU students can get the same deal as locals, including free or discounted tuition.
What do tuition fees pay for?
Tuition, obviously. They also contribute to uni facilities and provisions. Some of it goes towards financial support for students struggling to get by, or from low-income families.
At the end of the day, you’re paying for it: find out where it goes, how it’s spent, what it doesn’t include and, crucially, what returns you’ll get on it, whether that’s a better-stocked library or a better chance of getting a job when you graduate.
Credit: Polycart – Flickr
Should you shop around for lower tuition fees?
Most universities charge what all the others in their country charge so, unfortunately, it’s not like you can ditch Waitrose for Lidl! Living costs such as rent, food and transport – the things you have to pay for up-front – may be a better way to judge what’s affordable for you (use our Student Money Survey to see how costs vary around the country).
Where fees matter more is if you opt to pay more than you could, such as if you get free tuition or grants in your home country that you’d lose by studying somewhere else.
Students from England have the biggest incentive to shop around. While you can be charged up to £9k wherever you study, some universities – especially elsewhere in the UK – charge significantly less. Abertay Dundee, for instance, charges students from the rest of the UK a maximum of £7,500.
Smaller colleges are also an option: some offer the same degrees for less than their big-name rivals. Staying local (living at home and studying in your neighbourhood) can also net you substantial savings on living costs. Don’t forget that UK students can study at some universities in Europe, as well as in the Republic of Ireland, for free: check our guide to studying abroad for the big picture.
The big tot-up is how you stand with the idea of graduating in debt, and whether you’d rather pay more up-front, or push back as many costs as you can. Take a look at our Loans lowdown before you decide.
The bottom line is that, fees or not, getting a degree is pricey. Studying at a uni (or location) you have no love or respect for just because it’s cheaper will still be cash burner. Don’t forget your subject passions or the uni’s teaching credentials/facilities, and how both can help you get your cash back through a decent income later on!
Find out with our calculator!
At up to £9k a pop, you’d think tuition fees would see you fully paid up. They don’t. You’ll have to confirm extra course costs for yourself, but generally you’re looking at things like books, stationery, lab kit or art materials, field trips, printing, photocopying and presentation.
Once you’ve costed that lot up, you’ll need to allow for them in your budget to make sure you’ve got enough cash to get by.
This is what no one tells you before you go: living costs are the biggest drain on student pockets. While tuition costs can be pushed back until you graduate, you’ll still have immediate costs to bankroll: accommodation, bills, transport, socialising, laundry and, if you’re into that kind of thing, food.
Now, there’s no need to panic: some of those can be covered by the Maintenance Loan or any bursaries and grants you’re entitled to. Chances are, though, you’ll need a bit of back-up from savings, your folks, a part-time job or smart money-making ideas.
As with course extras, get an idea of all your costs and stick them in a budget planner so you’ll know how much you need to get by before you land on campus.
The Tuition Fee Loan
Most first-time undergraduates on an approved course are likely to be eligible for Student Finance in some flavour.
The Tuition Loan, which covers your fees, is the big one. The money’s paid directly to the university, and you don’t have to repay it until you leave your course and are earning enough (more about that below).
You can get a maximum of £9,000 per year towards your tuition depending on the cost of your course. Most prospective students should be fine but it’s worth checking the eligibility criteria for taking out the loan.
Those on part-time courses can also apply for tuition fee loans.
The sole purpose of this loan is to cover your day-to-day living costs. Differently to the tuition fee loan, it’s paid directly to you.
You don’t have to take out a Maintenance Loan but, if you don’t have a mountain of cash to fall back on, it’s an option. Everyone eligible to apply can get some of the Loan, but getting the full bucket of fries is ‘income contingent’: the less household income you have, the more you can apply for (up to a maximum).
Here’s how much full-time students can apply for in England:
|Where you live & study||Max. Maintenance Loan 2016 starters||Max. Maintenance Loan 2012-2016 Starters|
|Live at home||£6,904||£4,565|
|Live away from home||£8,200||£5,750|
|Live away from home (London)||£10,702||£8,009|
|Live away from home (abroad)||£9,391||£6,820|
Don’t forget that these are just the maximum amounts you could apply for. What you actually get will vary: the numbers are different for the rest of the UK, with household income ultimately dictating what you’re entitled to ask for.
As a rough guide, in England you’ll need household income of £25,000 or less to get maximum maintenance. Above £25k, money’s awarded on a sliding scale.
The table below is an indication of what you could get if you are starting uni this year and living away from home (outside London).
|Household Income||Maintenance Loan|
If your parents earn above £25,000/year they are expected to help you out (more on that below).
Top tip: maintenance funds are doled out in instalments throughout the year, so it’s up to you to make it last. Don’t be tempted to bust it all in Fresher’s week, or it could be a long term of eating cut-price noodles!
You might also find maintenance money doesn’t arrive before you get to uni – make sure you’ve got some other cash to hand to keep you going.
What extra funding is available in 2016?
In England, students starting uni in 2016 and after can no longer get a Maintenance or Special Support Grant. This has been a bit of a bombshell. Some students worry that means they can’t afford to go to (or stay at) uni – but what’s the story?
Grants are student finance you don’t repay. The Government has stopped this free cash, and now expects new starters to take on bigger loans to, essentially, pay their own way. The total amount of maintenance money on offer hasn’t changed much. However, you’re likely to leave uni with more to pay back.
That doesn’t have to mean uni is any less affordable. As with the Tuition Loan, you’ll only start repaying when you earn enough: get the Loans lowdown to see where you stand.
– The change only affects students funded under the English system
– It only affects new starters from 2016 – if you already get a Grant, it won’t be taken away (see below)
– If you want to go to university, there’ll still be funding to help you get there.
If you started before 2016 and are currently at uni the table below shows the grants you are eligible to receive.
|Household Income||Maintenance Loan||Maintenance Grant||Full Amount|
Money from parents
As things stand, some Student Finance pay-outs take your household income (how much you or your parents earn) into account. If there’s a shortfall between how much the State contributes, and how much you really need to live on, you’re expected to cough up for some of the difference yourself. More specifically, your parents, guardians or partner are expected to chip in.
In reality, that’s not going to work for everyone but, whether the money’s on the table or not, it’s worth thinking about your options and having The Talk up front:
– Can your folks contribute any cash? Will it be a loan or a freebie? Any conditions on how you spend it?
– If they can’t help you financially, how else could they support you? Don’t underestimate the power of leftovers!
Feel free to show them this guide if you are struggling to convince them. We also have more on asking your parents for money here.
If cash handouts are a no-go, now’s the time to think about how else you’re going to keep your budget in the black!
Awards and scholarships
These are the overlooked cash pots of student finance!
Some depend on academic achievement, but there’s a huge array of criteria – everything from studying an unusual subject to being sporty, or even where you were born. Some pay-off tuition fees (reducing your overall debt), while others give cash grants or kit, or a choice. We’ve a list of sources to search for hidden cash right here.
Disabled Students’ Allowance (DSA)
The DSA provides extra funding if you have a disability that affects your studies (including long-term physical conditions, mental health, and unseen or learning difficulties). You’ll need to provide evidence to be eligible but, if you are, there’s cash to pay for specialist equipment, a helper, and other costs.
The allowance is on top of any Student Finance you get, isn’t affected by household income, and doesn’t have to be paid back. Accepting other disability related grants or support can affect whether you get DSA, so talk it over with your uni or school’s advisor first, or head over to your Student Finance body.
Other student grants
Don’t overlook other grants going, including for course travel costs, in-demand subjects (like teaching), and the NHS bursary. Details are in our Student grants, bursaries and scholarships guide.
Universities charging the full enchilada in tuition fees have to keep some of the cash aside to help those struggling financially. Some of the money may be ring-fenced for particular circumstances, such as students from low-income backgrounds or with disabilities or dependants.
Whatever the score, if lack of cash is stopping you studying, talk to the uni’s welfare team or student money advisor about any emergency grants or loans going. Heads-up: you’ll need to take copies of your Student Finance letters and your budget.
The turn2us grants calculator can help you find charity funds based on a whole heap of criteria – everything from your religion, nationality or gender to health conditions, personal issues and family situation.
While banks aren’t the first place to turn if you’re looking for a cuddle, learning how to use your student account properly – and when to use benefits like an interest-free overdraft – can help you get your hands on extra cash when you need it.
Your own cash
There’s no denying that anything you can chuck in the pot can only help you out.
In this section:
9% of anything you earn over £21,000 per year
You’ll only start repaying your Student Loan once you’ve left your course and are earning more than the repayment threshold (£21,000 in England or Wales, £17,495 a year in Northern Ireland and Scotland).
Note: for those that started uni before 2012 you will start repaying when you earn over £17,355/year.
You’ll pay 9% of anything you earn above that amount. If you don’t earn more than the threshold, you won’t pay anything.
Here’s what your monthly repayments could look like (remember these are just guide figures!):
|Yearly salary||Monthy repayments (England/Wales)||Monthy repayments (Scotland/NI)|
The money’s automatically docked from your wages before you get paid and, because repayments track your weekly or monthly income, if your salary goes down (or stops), you won’t pay until you’re back over the threshold. Unless you’re self-employed, it all happens magically without you needing to do anything or remember to make payments.
After 30 years, any remaining loan is wiped
(it’s 25 years in NI, 35 years in Scotland). So, if you don’t go into a big bucks career, you may not earn enough to pay back the full Loan – and there’s nothing anyone can do about that.
Note: for those that started uni before 2012 your debt is wiped 25 years after graduating.
On the other hand, the more you earn, the more you’ll pay back. It’s worth bearing in mind as by the time your salary pumps up to decent levels, you might want to do other things with it (such as paying for a mortgage or buying a new car)!
If you want to find out how fast you’re likely to hit the salary threshold, check the average starting pay for your degree. To get an idea whether you’ll pay off the whole Loan (or how long it could take you), plug that number into our Student Loan repayment calculator.
You pay tax on your initial salary
What’s that? Double whammy, you say? Unfortunately, Student Loan repayments don’t entitle you to any tax breaks. That means you’ll pay income tax on your salary before the Loan repayment comes off.
For example, if you earn £45,000 a year, any income tax you owe be collected in the normal way. When your Loan repayment is calculated, though, it’s still worked out from that starting £45k figure. You won’t pay less income tax, even though you’ve had to ‘lose’ a bit of your salary towards Loan repayments.
Income doesn’t just mean salary
Whether you’re paying tax or paying back the Student Loan, ‘income’ includes any taxable money you get. That includes interest from some savings accounts over £2,000, and certain job perks or State benefits. Worth keeping an eye on as they could unexpectedly tip you over the repayment threshold.
WARNING: The terms aren’t set in stone
Shockingly, there’s nothing in the Loan agreement guaranteeing that salary thresholds or the 9% figure will be honoured.
In fact, the Government’s currently being challenged on plans to freeze the £21,000 salary threshold (which effectively mean you could be paying more in relation to rising costs of living). Keep an eye on the news – or bookmark this page – for updates.
Interest is the sting in the tail
Just like any kind of loan, the Student Loan whacks interest onto everything you borrow.
For students in Scotland and NI, interest is set at RPI (currently 0.9% per year).
In England and Wales, however, interest is charged on top of the rate of inflation. That means you’ll be charged between whatever inflation is set at (currently 0.9%) plus up to 3% each year.
Here’s how the interest works.
Whilst at university: You will pay the rate of inflation (RPI) plus another 3%. This will be the same until April in the year following your graduation. Even before graduating, students taking a loan with the SLC will have racked up a hefty amount of interest in addition to the higher fees.
After graduating: If you earn under £21,000 then your interest rate will be set at inflation (RPI), as with the old system. For every additional £1k you will be charged an extra 0.15% pa on your loan. Once you earn above £41,000 you will incur the additional 3% annual interest rate.
(A big) However, despite all of this, graduates will actually make repayments of £540 less every year compared to the old system. The catch is that the total debt will be much higher and therefore you will be paying off your student loan for a longer period.
Note: Those students in England that started before 2012 will pay interest at the rate of inflation (currently 0.9%) OR the bank of England base rate plus 1% (currently 1.5%) depending on which one is lower.
Added interest means you’ll owe more than you actually borrowed, and could be making repayments for longer. Head over to the Student Loans Company to sniff out the numbers for yourself.
It doesn’t affect your credit rating
Your student debt doesn’t go on your credit files so it won’t affect your ability to borrow in future.
However, it could have a very small effect on mortgage applications. This is simply to do with the fact that a student loan will mean you have less take home pay each month. Therefore it’s not the debt but more the repayments that can have an impact (although minimal).
Finally, there’s no debt collectors or angry people chasing your money with student loans. If your salary ever dips below the minimum repayment threshold you’ll just stop paying altogether.
Moving abroad doesn’t save you
There is a strong rumour spread across universities that says if you move abroad for a certain amount of years then your student debt is written off. I’m afraid this is not the case and you still have to pay back anything you earn over £21,000.
You can choose to clear your student debt or make higher repayments at any time – the question is, should you?
While you might be tempted to pay off your Student Loan in full as soon as possible, remember that the rates and terms are better than with commercial loans.
It’s also worth thinking about how likely you are to pay off your entire Loan based on your predicted earnings (and remember that anything you haven’t cleared after 30-ish years is wiped off). Clearing the Loan early could mean paying when you don’t have to, plus, once you’ve handed the money over, you can’t get it back if you need it for anything else.
Think it over before you part with your cash, and only pay-up when you can really afford to.
While it’s good to be cautious about borrowing in general, the Student Loan is a slightly different kettle of fish.
Firstly, it’s not like a commercial loan. Yes, it’s borrowing, but on more affordable terms than you’ll get anywhere else. More importantly, paying it back depends on earning enough later on: in that sense, it works more like a tax than a loan. If you don’t earn enough, you won’t make repayments – which is pretty much how income tax works. For that reason, it makes sense to get a Student Loan if you’re eligible, rather than paying up-front (or paying back the Loan early!).
Most students won’t be able to afford university without the Loan, but what you get for your ‘debt’ – a degree – is a high value purchase: it can help you earn more throughout your career than non-graduates.
The best advice for the current system is to not get sidetracked by the total you’ll end up owing. While that’s an important number, keeping an eye on things like your graduate salary and monthly repayments (and how likely you are to repay) can give you the bigger picture of whether the Loan’s right for you.
ALWAYS check what other funding you could grab
Every year, hundreds of students miss out on free money because they don’t know the extra cash is there. Whether you meet the low-income criteria or not, there could be funding out there with your name on it, from scholarships and emergency cash to company sponsorship. If you don’t ask, you won’t get, and if you don’t search, you won’t find: here’s where to look first.
Get a part-time job
With two-thirds of students upping their income with a job, employment is an obvious go-to for keeping debt in check. Check your uni’s rules on part-time work and, most importantly, make sure any gigs you go for fit around your studies.
Make your own money!
No jobs in your neighbourhood? No problemo! There are scores of ways to make legit lolly, from freelancing to starting a bona fide student business. Need ideas? We’ve got 40 quick cash injections right here.
Don’t lose out on tax
If you don’t earn more than the ‘personal allowance’ each year, you won’t have to pay tax on your income, whether from wages or interest you get from the bank. Don’t pay if you don’t have to or, if like many students, you’ve been over-charged, get it back!
The other biggie is that knowing what counts as taxable income – and what doesn’t – can help you get the Student Finance you’re entitled to. It could even make a difference to how much and when you start coughing up towards your Student Loan.
Either way, it pays to get to grips with tax: read our top student tax tips to get it done in a jiffy.
Keep things in balance
Any money coming in – whether it’s loaned or earned – is just one side of the story if you’re barreling through it faster than your data allowance in a wifi blackspot. Learn how to make it last, and you’ll be on to a winner!
Hopefully this guide has given you a clearer idea of what Student Finance means for you, based on facts rather than hype. We’ve also shown you options beyond Loans and grants, and pointed the way to cash that can help you get to – and stay at – university. Make the most of what’s out there!
Got questions? Ask away below: we promise to give every student a response, or point you in the direction of more info.
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