If you're thinking about university, it's natural to be worried about taking on a student loan. However, student debt is not the same as a normal debt. Here are some facts we hope you find really helpful.
Whatever our understanding of financial matters we are all taught that debts are a bad thing. So some people argue that student 'debt' should be called something different, more accurate and less frightening to potential students!
Here are some tips on student finance, repayments and money management.
What help is available
First, you do not pay any money upfront. You can apply for a Tuition Fee Loan, meaning your fees will automatically be paid by the Student Loans Company to your university. You should apply online by 31 May of the year before you start.
You can also get a loan for your living expenses (food, accommodation, travel, books) called a Maintenance Loan. This is normally paid in three instalments (one per term) and direct to your bank account. How much loan you get will depend on your circumstances as it is means-tested (based on elements like household income and where you live). Over half of the maintenance loan is not affected by your circumstances, so everybody will be eligible for at least a bit of support.
There is also a variety of other grant and allowances that might be relevant to you: Adult Dependent Grant, Childcare Grant, Parents' Learning Allowance and Disabled Students' Allowance. Find out more about each of those on our finance pages.
NHS students (those studying nursing, Operating Department Practice or Midwifery) can also get the NHS Learning Support Fund (LSF) to help with placement travel costs and childcare. It can also include a hardship fund for those who have exhausted all other means of funding.
Additionally, we give all eligible students £400 to spend through our Books Plus scheme. (It's not just for books! You can also get Apple products, laptops and tablets, ARU clothing, digital texts and sport membership.)
Repaying your loans - how does it work?
At the earliest, you will start repaying your loan in the April after you graduate. At the moment, if you earn less than £21,000 then you will not repay anything (and this threshold is likely to be increased to £25,000 in April 2018 as part of a student finance review). In fact, in theory, if you earned less than £21,000 all your working life you would never had to repay your debt. If you were to take a pay cut or lose your job at any point of your working life, your repayments would simply stop. After 30 years, the debt gets wiped, whether you have repaid the full amount you borrowed does not matter.
If you earn above £21,000, you will pay 9% of any money you earn above that threshold. Let's take NHS students as an example. Our students start on the NHS band 5, which on the 2017-18 scale starts at £22,128. £22,128 is £1,128 above the threshold and 9% of this is £101.52. You would repay £101.52 a year or £8.46 a month.
This repayment will be taken from your salary by your employer before you get it, so it won't have an impact on the money that comes in your account and you won't have to worry about remembering to pay.
Student loans do not affect your credit rating.
Having a student loan won't affect your applications for a credit card, a loan or a mortgage. So basically having a loan will not stop you from buying a house in the future.
What can I do to save money?
There are many discounts available to students, so make good use of them. The NUS Extra card, for example, will help you save on travel, eating out, fitness and cinema tickets – plus there's 10% off food at the Co-op. It costs just £12 per year or £32 for three years.
If you travel regularly you can get a student railcard or a National Express coach card.
It also helps to set a budget. Keep track of your spending by reviewing it regularly and doing a bit of forward planning. Mobile apps can be a good tool and websites such as Save the Student or Brightside student calculator can be helpful, too.
Finally, our Money Advice service is here to help. They have drop-in sessions every day and will give students and prospective students advice on all aspects of finance such as budgeting and money management, student funding, welfare benefits and more.
So there you have it! Hopefully this blog has answered some of your questions and put some of your worries to rest. There is a lot of help out there to support you through your university journey and we like to think that in the long term, you feel the full benefits of having a degree.