Introduction to student finance

Introduction to student finance

The last two years have seen the biggest overhaul in a generation on tuition fees and how students fund their higher education. In this guide we show how you can navigate the system and check your entitlements.

Written by Trevor Lloyd-Jones on 11 September 2013


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What does it cost?

There are two main costs higher education students need to cover: the tuition fees and maintenance or living costs.

The main elements of the student finance package are:

  • the tuition fee loan,
  • the maintenance loan (full-time students only) and
  • the maintenance grant (full-time students only).

The rules are different if you became a student under the 'old system', before September 2012.

Tuition fees

Universities and colleges in England can charge full-time students up to £9,000 a year in tuition fees. For old system students who started courses before September 2012, the maximum fee in 2013-14 and 2014-15 is £3,465. The maximum fee for institutions with access agreements - those receiving special subsidies from the Office for Fair Access - is £3,465.

For new students starting in 2014-15 the average tuition fee is £8,647. This is a 2% rise compared to 2013-14.

Almost three quarters of universities and colleges now charge the full amount of £9,000, up from six out of ten in 2012-13.

The average amount being paid for 2014-15 is £8,425-a-year, taking into account fee waivers, the scheme where universities forgo some fees to encourage clever or less well-off students.

The average amount being paid for 2014-15, taking into account all institutional support, is £8,006.

The Office for Fair Access (Offa) provides an A-Z index where you can view all the tuition fees set by universities and colleges for the coming year.

You can access the Offa website at this link www.offa.org.uk

Paying for tuition fees

If you are a full-time student studying on your first higher education course you can get a Student Loan from the Government to cover all your tuition fees.

The tuition fee loan is paid directly to your university or college. Your tuition fee loan may not cover all of your fees if you study at an approved private university or college.

If you're a part-time student, to get student finance you must complete your course in no more than four times the time it would take to complete your course if you were studying full time (up to a maximum of 16 years).

The tables below show you how much you will need to pay back on your loan when you start working and the interest rate.

Your income per year

Interest rate on your Student Loan

While you're studying

Rate of inflation (RPI)-plus 3%

£21,000 or less

Rate of inflation

£21,000-41,000

Varies between the rate of inflation and the rate of inflation-plus 3% depending on your income

£41,000 or more

Rate of inflation-plus 3%

If you took out a Student Loan before April 2012 (a plan 1 loan), you start paying back your loan once you reach the earnings threshold of £314 a week, £1,363 a month or £16,365 a year.

Your income per year before tax

Monthly repayments on your Student Loan

Up to £16,365

No repayments

£16,500

£1

£21,000

£34

£24,000

£57

£27,000

£79

£30,000

£102

Full-time and part-time students who complete their course before 2017 won't start Student Loan repayments until April 2017.

For example, if your course finishes in June 2016 and you get a job paying £25,000 in September 2016, you start repayments in April 2017. If your income falls below £16,635 a year, your repayments stop.

If you have a plan 1 loan (before April 2012) and a plan 2 loan (after April 2012), the table below shows how your repayments work. The amount you repay to each type of loan depends on your income.

Your income per year before tax

Monthly amount paid to plan 1 loan

Monthly amount paid to plan 2 loan

Total monthly amount paid to all loans

Up to £16,365 (the plan 1 income threshold)

No repayments

No repayments

No repayments

£18,000

£12

No repayments

£12

£21,000 (the plan 2 income threshold)

£34

No repayments

£34

£25,000

£34

£30

£64

£32,000

£34

£82

£116

Repayments made from your income between £16,365 and £21,000 are applied to your plan 1 loan balance. Repayments from your income above the £21,000 threshold are applied to your plan 2 loan balance.

The table below shows how much different types of students can borrow in each academic year.

Student type

Maximum tuition fee loan per year

New full-time students

£9,000

New full-time students at private university or college

£6,000

New part-time students

£6,750

New part-time students at private university or college

£4,500

The student finance section of the Government website at www.Gov.uk/student-finance offers some guides to repaying your loan through PAYE or through self assessment.

Different repayment rules apply if your course started before September 1998.

You should check the Student Loan Repayment website at this link www.studentloanrepayment.co.uk for more information. This website also has detailed terms and conditions for student loans in England and Wales, for EU students and information on how to make a complaint.

Anyone falling behind with their student loan or seeking more information should contact the Student Loans Company on telephone 0845 300 50 90 or log on to the Student Loans Company website at www.slc.co.uk

Student Finance England, through the Gov.uk website, offers a Student Finance Calculator where you can get a clear estimate of the financial support you could receive. You can also save your calculations and revisit them later.

You can access the Student Finance Calculator at this link www.gov.uk/student-finance-calculator

For information about claiming help for studying in Wales see www.studentfinancewales.co.uk

For information about claiming help for studying in Northern Ireland see www.studentfinanceni.co.uk

For information about claiming help for studying in Scotland see www.saas.gov.uk

The UCAS website at www.ucas.com also has useful information about student options, how to apply for study overseas and how to start your application for university online.

Living costs

Aside from tuition fees, as a student you need to calculate how you'll pay for living costs which will include books, accommodation, food, travel and leisure. Maintenance grants and maintenance loans are available for these expenses. 

Full-time students can apply for a maintenance loan, although the maintenance grant is means-tested and available where your household income is less than  £42,611 in 2013-14 (see table below).

For managing your money, many of the big banks offer attractive deals for students opening new accounts with free giveaways and interest-free overdraft offers.

You will get a debit card for all your daily spending but remember that if the bank is lending you money, the more you borrow, the longer it will take to pay it back. The loan may be interest-free while you are a student but you will have to start paying interest and repayments when you graduate. Student jobs or a gap year can help your budget, and also provide some useful career experience.

Maintenance loans

While studying, students can get help with their living costs through a combination of the maintenance grant, a maintenance loan (administered through the same system as the tuition fee loan) and special support grants.

Full-time students can apply for a maintenance loan to help with living costs. Part-time and EU students and students aged 60 and over can’t apply. Maintenance loans are paid into your bank account at the start of each term.

Part-time students that don't meet the requirement of a full-time equivalant course can't apply for a maintenance loan or a tuition fee loan. Instead they can apply for a fee grant or a maintenance grant. How much you get depends on your circumstances, household income and course 'intensity'. 'Intensity' is how long the course takes to complete compared with an equivalent full-time course.

All other students can get help with a maintenance loan, regardless of whether or not they declare their parents' income or household income.

The exact amount full-time students can borrow depends on:

  • your family's income
  • where you live
  • what year of study you're in
  • what help you get through the maintenance grant.

Rates for final year students are different and you should contact Student Finance England to find out what rate applies to you at www.gov.uk/contact-student-finance-england

You can apply for 65% of the maintenance loan without having your parents' income looked at. The other 35% is means-tested (it depends on your or your parents' household income).

If you want to get the full loan Student Finance England will assess your household income and base the amount of your loan on that. Your household income is your parents' or your partner's income, plus yours.

Where you live and study

Maximum maintenance loan for full-time students for courses from September 2013

You live at home

£4,375

You live away from home and study outside London

£5,500

You live away from home and study in London

£7,675

You spend a year of a UK course studying overseas

£6,535


Maintenance grants

Non-repayable maintenance grants are available to students whose household income is £42,611 or less. Your household income is your parents' or partner's income and your own.

The maximum maintenance grant is £3,354 if your household income is under £25,000.

If you get a maintenance grant your maintenance loan may be reduced. You can apply for a maintenance grant through your main student finance application and you can only get a maintenance grant if your household income is assessed. This means Student Loans Company will look at your household income and work out how much money you get for your maintenance grant.

If you get or qualify for Income Support or Housing Benefit you may get the special support grant instead of the maintenance grant. The amount you can get through the special support grant is the same as that available through the maintenance grant but it won't reduce how much you get for your maintenance loan.

You are likely to qualify for the special support grant if:

  • you're a single parent
  • your partner is also a student
  • you have certain disabilities

Your household income (full-time student)

 

Maintenance grant for courses from September 2013

£25,000 or less

 

£3,354

£30,000

 

£2,416

£35,000

 

£1,478

£40,000

 

£540

Up to £42,611

 

£50

Over £42,611

 

No grant

When to apply?

You should apply for all your student finance in the spring of the year that your course starts. The Student Loans Company usually announces a date in January/February when applications open and a deadline in May for submitting applications.

You and your family will need to complete a PN1 form from Student Loans Company which asks a range of questions about your finances and the household in which you live.

Other help

There are other sources of help with tuition fees and study costs such as bursaries or scholarships direct from the universities. You should also look for information on the new Higher Apprenticeships, which are the technical or vocational equivalent of a degree, as well as the National Scholarship Programme.

If you qualify for the National Scholarship Programme, you can choose between a  £1,000 cash bursary, help with tuition fees and accommodation or a free foundation year. Some charities offer funding too.

You can view lists of organisations offering scholarships at www.scholarship-search.org.uk

There are scholarships to help with low-income households, professional qualifications, MBAs and other specific post-graduate courses as well as scholarships targeted at London students or international students.

Government research has shown that bursaries are not well understood by students and they usually are not considered early enough in the process to have an impact on choices. So you need to look at these as soon as possible in your own calculations. 

There has been some progress in the last five years in widening access to universities although this is less at the most selective universities and medical schools.

If you qualify, bursaries can help pay off your fees and living expenses and they don't have to be paid back.

You can get money from your university or college in addition to your Student Loan or grant. This includes help from the National Scholarship Programme if your family's income is less than £25,000.

You can use the Student Finance Calculator at www.gov.uk/student-finance-calculator to get an estimate of the loans, grants and bursaries available.

Three-quarters of the £350 million public money allocated every year to bursaries goes to the poorest students, those students whose parents earn less than £25,000 between them.

Universities and colleges spend another £38 million on additional outreach such as summer schools, mentoring and visits to schools and colleges in disadvantaged areas. In total, universities spend a quarter of their 'additional' fee income on these access measures.

There are three main types of bursary:

  • a fixed bursary - for example where a university gives £1,000 to students on full state support and £500 to students on partial state support (or at a different level determined by the university in question). The bulk of bursaries fall into this category
  • a sliding scale - for example  where a university gives a bursary of between £50 and £2,000 depending on the student's assessed household income
  • a bursary linked to the level of state support provided as a 'match' or as a percentage - for example where a university gives a bursary equal to 50% of a student's state support.

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