Student Loans: What You Need to Know

The considerable cost of going to university means that it’s important to research every source of money you can find - and the student loan will be one of the largest and cheapest forms of borrowable money available.

Although the term “student loan” is often banded around, discovering the amount of loan available and how to apply form it may not be as simple as you hope. So this article outlines the ins and outs of student loans, including the amount you could be due to receive, and when and how you will have to pay it back.

The Basic Facts About Student Loans

Student loans are sums of money that you can elect to receive from the government in order to help with the costs of studying and the everyday costs of living as a student. Every student is eligible, as these loans are not means-tested, but the cash has to be repaid - although not immediately. Student loans have to be repaid once the recipient is in a job that pays more than £15,000 a year. Once you reach that salary level, you will start to pay back the loan in increments.

Types of Student Loans Available

University students are eligible to apply for two kinds of student loan every year; one covers the full price of tuition fees - the amount of money you have to pay to your university to study for your degree - and a student loan for maintenance, which is aimed at helping you to pay for all the other costs of attending university, such as accommodation, food, travel, and so on. For this latter student loan, the amount you receive is means tested, which means it is dependant on your household income. In practice, this usually means that the amount you are eligible to receive depends on how much your parents earn.

Repaying the Student Loan

As written above, student loans have to be paid back, but not until you start work. Once your earnings are more than £15,000 a year, the rate at which you have to pay back your loan is 9% of the part of your income that exceeds £15,000. So, if you earned £21,000 you would pay back at a rate of 9% of £6000. Most new students will also be offered the chance to take a repayment “holiday”, of a maximum of five years, before paying the sum back.

How Much Can I Apply For?

In England, Wales and Northern Ireland, the tuition fee student loan, which is not affected by household income, is up to £3,225 - the maximum amount that tuition fees can be. This money is paid directly to your university or college. Scottish students studying in Scotland do not have to pay tuition fees so do not need this loan. The student loan for maintenance is a maximum of £4,950, unless you’re a student in London. whereupon you are eligible for a little more. This amount is normally paid in three lump sums at the start of every term. Remember the £4,950 is the maximum amount, and you will have to be means-tested to find out your own individual eligibility.