As you approach the end of your A-levels, you’ve got a long (and hopefully hot) summer ahead of you before taking the plunge and heading off to university.
And while you’ll still be waiting for your exam results in August to see whether you’re ensured a place, it’s worth taking some time to think about your finances – particularly, just how your parents’ income might affect the student loan allowance that you receive.
But before you nag them to get on the phone to their bank manager and their financial advisor in order to fund your future, we’re going to take a look at the actual tuition fee costs and how repayments are worked out, before studying maintenance loans for your living costs (rent and books to your parents, pizzas and pound-a-pint funds to you!).
Tuition fees
Both full-time and part-time students must pay a tuition fee to their college or university. Most of the time though, this will involve no up-front payment from yourself or your parents.
The current rates are as follows:
- Up to £9,000 for full-time students
- Up to £6,000 for full-time students at a private university or college
- Up to £6,750 for part-time students
- Up to £4,500 for part-time students at a private university or college
Your parents’ income will have no impact on your tuition fees, or the rate at which you will pay it back.
Since the coalition government controversially upped the tuition fees almost 5 years ago, the repayments terms have also changed.
For all new students starting this year, you will not begin repaying your loan until the April following the end of your course. You also will not repay anything until you are earning over £21,000 per year.
Once you’re earning over £21,000 per year you will pay back the student loan at 9% of your annual earnings. Your loan is subject to interest, at a rate of inflation + 3%.
A student tuition fee loan is the cheapest loan you’ll likely ever get, and often it’s not worth paying back early. It also gets wiped out after 30 years of paying it too.
Maintenance loans
This is the money you’ll actually see in black and white on your bank statement at the start of every term; the cash that you have to resist blowing in the Topshop student discount events or during Freshers Week before you realise that it has to last so you can actually, you know, eat!
This is also the one that your parents’ household income can actually impact, and you’ll need it to pay your rent and bills as well as any books you might need for your course.
Here’s a breakdown of the amounts you could receive as a full-time student:
- Up to £4,565 if living at home
- Up to £5,740 if living away from home, outside of London
- Up to £8,009 if living away from home, in London
- Up to £6,820 if you spend a year of a UK course studying abroad
Your maintenance loan, whether you think it’s fair or not will be impacted by you parents’ income; just as those who are on higher wages are expected to pay more tax, your parents are expected to help to subsidise your time at university.
If your parents’ household income is over £62,000 (or £31,000 each), they will be expected to provide a ‘subsidised contribution’ of £2,009.
That means if you’re living away from home (outside of London), your maintenance loan will be capped at £3,731 per year.
Free money
No, your revision-blurred eyes are not deceiving you – there are opportunities to get completely free, don’t-have-to-pay-it-back money to buy more books (‘honest, Mum!’), in the form of grants and bursaries.
University bursaries will vary according to the school, but maintenance grants for living costs are available to eligible full-time students in the UK.
You have to provide details of your parents’ household income, and while you don’t have to pay it back, it can impact on the maintenance loan you’ll receive.
Here are the maintenance grants you could be entitled to:
- £3,387 per year if from a household with an income of £25,000 or less
- £2,441 per year if from a household with an income of £30,000
- £1,494 per year if from a household with an income of £35,000
- £547 per year if from a household with an income of £40,000
- £50 per year if from a household with an income of £42,620
- No grant if from a household with an income of over £42,620
You can use the Government’s official student loan calculator to work out just how much maintenance loan and grant you should receive.
Budgeting
Could you live on £5,740 per year? Bear in mind that this has to cover rent, bills, food and books, as well as the socialising you’re undoubtedly going to be doing.
The best thing to do is to budget accordingly, and up front – preferably before you even head off to university. At least this way you’ll have the mind-set that you’re on a wage of less than £500 per month and can prepare accordingly!
Either that, or stock up on huge bags of rice and pasta at the start of the term and hope they’ll see you through to your next loan instalment…
Ryan Smith is part of the content development team at Local Financial Advice, connecting people with independent financial advisors in their local area to help them achieve their financial goals.