If you are going off to university for the first time, you might be considering taking out a student loan to cover your maintenance. Living away from home while studying full time can be a huge burden to finance, and your maintenance loan is there to help you to pay for that. You will also have the option to apply for a tuition loan, which covers the cost of your university fees.
Around £20 billion is loaned each year to around 1.5 million students in England alone. This guide aims to answer questions that undergrads might have about their loans.
Am I eligible for a student loan?
While the majority of students qualify for the full amount of tuition fees, maintenance loans are means tested. The level you can qualify for is tapered depending on the excess of household residual income over £25,000.
Your eligibility, as well as how much you qualify for, can depend on other factors such as:
- Your university
- Your age
- Your course
- Your nationality or residency status
What do I use my loan for?
The majority of your maintenance loan will likely be spent on renting a room in student accommodation or flats. This is the case because most students will be studying in places that are not within a commutable distance from their hometowns.
How do I apply for a student loan?
This depends on where you live and whether you have studied before, but the majority of students have the option to set up an account on Student Finance England. From there, you can complete an online application with some proof of identity and household income.
You can apply for your loan up to 9 months after the first day of the academic year, which depends on your university and your course.
What are the alternative options to student loans?
Loans are not the only way that people pay for their higher education. You should also consider scholarships, grants, and bursaries. There are plenty of finance options that are given for other reasons than academic excellence and economic disadvantage.
Of course, you can fund your student loan yourself if you have a part-time job or if you receive help from family and friends. You should be aware of the risk of payday loans and other high cost loans, since these are not well suited for students and will often cause more debt problems. It is unlikely that you might be eligible for an unsecured, personal or secured loan with such limited credit history as a student.
Do I need to have a confirmed place to apply for a student loan?
No. You should apply as early as possible to ensure the best chances of receiving the funding you need by the time your place has been confirmed.
What happens to my student loan after university?
There are four repayment plans, and your plan will determine the amount you pay. You cannot choose which plan you fall under, as it will be determined for you based on your individual eligibility criteria.
You do not start repaying your loan until you begin earning the minimum amount stated by your specific repayment plan. Keep in mind that all of the minimum salary amounts are before tax and other deductions.
How do I repay my student loan?
Your student loan plan will set out a repayment criteria. Once you meet this criteria, your repayments will be taken out of your salary at the same time as your tax and NIC (National Insurance contributions). This information should be available on your payslips.
If you are self-employed, HMRC will work out how much you owe, which you will pay yourself at the same time as you pay tax.
You can make extra repayments or pay it off early without any penalties. However, if you do choose this option, you cannot get refunds on the extra payments.
