Are you starting to think about student loans and university applications? Does it fill you with dread? Or are you just unsure of what student finance is all about?
This month is A Level and GCSE results days; 16th and 23rd respectively. As the mum of a now 17 year old, I can reflect proudly on one of those occasions and look forward to the other next year. I wish the very best of luck to you and yours if anyone is expecting results in the coming weeks.
I know first hand about planning the next stages of education and for many parents and even grandparents our thoughts turn to student loans and university. So what does this actually what does this mean, and how much will it all cost?
The tuition fees in England can be up to £9,250 a year (there are other amounts for Wales, Northern Ireland and Scotland) and for the majority, student finance (commonly known as a student loans) will be the only option to fund the fees.
With living costs estimated to be between £9,500 and £15,000 per year depending on location, I think it might be useful to you to have some facts about student loans and university.
A tuition fee loan covers the cost of the course. The university or college sets the tuition fee, and the loan is paid directly to them. The student has to pay it back, however only once they have graduated and are earning more than £25,000 a year (in the 2018/19 tax year, if their loan is a brand new one. There are different rates for student loans which began in earlier years). After that, they pay back 9% of anything earned over £25,000. So if earnings are £30,000 a year, they will pay £450 in loan repayments or £37.50 each month.
It is worth knowing that student debt is not seen by mortgage lenders in the same way as for example a credit card debt is considered when applying for mortgage borrowings. Rather a lender will take the monthly repayment figure into account as a regular monthly commitment rather than looking at the debt as one outstanding figure. It does not appear on the student’s credit file either. Here’s an article from Which? which tells you more
So that’s the course fees covered but what about living expenses? Halls of residence will vary in cost much like property prices depending upon location and style. A studio apartment for a central London university will of course be much more expensive than a single bedroom but my own research shows that a studio at Newcastle Uni is still £6,650 for 40 weeks rent – that’s a little over £165 per week. Add to that food, entertainment, travel and any course materials and the additional costs can be up to £15,000 per year.
Maintenance loans are available (again they are repayable) but they are means tested against household income, including any income in the student’s own right. Outside of London a student not living at home might get up to £8,700 in the 2018/19 academic year. However as an example, a household income of £50,000 drops the maintenance loan to £5,579 per year. There are other factors taken into account such as special needs, if the student has their own children as well as where and what they are studying. The best thing to do is to visit the calculator by following this link and get a personalised quote
Hopefully this will have established if there is going to be a shortfall between what you will have to pay and what can be funded by student loans. Naturally this is where Red Star can help.
If there is a shortfall and you’d like to discuss options on how to fund it, or maybe your child or grandchild is a number of years away from applying for a university place and you want to get prepared, please contact the Red Star office on 01253 486346 or email firstname.lastname@example.org and arrange a complimentary meeting with me.
With 20 years’ experience in financial services and a daughter set on going to university, as I said, I have been looking into this subject with great enthusiasm. I am very well placed to answers your questions about student loans and university, and how to fund shortfalls. I really want to help you and your family plan for this very exciting period of time.