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Parents: an essential guide to student finance, university loans and fees

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Written by: YourMoney.com
16/08/2018
As students up and down the country open their A-Level results today, many hope they'll make the grade for their chosen university. As parents, you’ll be thinking about the financial implications of such a move. Here’s everything you need to know about tuition fees and living costs.

The Student Loans Company (SLC) processes all applications for students in England and Wales and administers funding on behalf of the government.

Scottish students apply via the Student Awards Agency for Scotland while students in Northern Ireland apply to Student Finance Northern Ireland.

Parents with children starting university after the summer may be asked to provide details in order to support their child’s student finance application, and if so, it’s best to do this as soon as possible so funding is ready at the start of term.

SLC provides the following guide for parents:

Living costs and tuition fees

There are two main costs for university students – living costs and tuition fees.

A Maintenance Loan helps students with their living costs, such as accommodation, travel and books. Everyone who’s eligible for student finance can get some Maintenance Loan, but the level differs based on your household income (you and your partner, if you have one).

Full-time students in England can get the following for the 2018/19 academic year, subject to differing household income:

  • Living at home: up to £7,324 (where household income is up to £25,000). Where household income is £58,215 or over, the amount awarded is £3,224.
  • Living away from home, outside of London: up to £8,700 (where household income is up to £25,000). Where household income is £62,215 or over, the amount awarded is £4,054.
  • Living away from home, in London: up to £11,354 (where household income is up to £25,000). Where household income is £69,860 or over, the amount awarded is £5,654.
  • A year of the course studying abroad: up to £9,963.

See SLC’s student finance package for a full breakdown of the tiers.

Your child can also get help with tuition fees via a loan of up to £9,250. How much they receive isn’t dependent on your household income. Instead tuition fees are set by the individual university, the maximum being £9,250.

If your child has a disability they may be able to get Disabled Students’ Allowances grant to help pay the extra essential costs they have as a direct result of their disability. This could be things like specialist computer software, help with extra transport costs or somebody to help them take notes in lectures. Again, what they receive isn’t down to your household income. Further, the amount won’t need to be repaid.

I have other children, is this taken into account?

Yes, you will be asked about your family as part of the application, whether you have other children at university or college at the same time. Depending on the circumstances, you could get more funding.

How is household income assessed if I’m separated or divorced?

You will be assessed on the household income of the parent that the student is financially dependant on, usually the parent that the student lives with. Household income includes the income of that parent’s partner, if they have one.

What do I need to do?

If your child hasn’t yet applied for finance they should do so now. The quickest and easiest way to apply is online at gov.uk/studentfinance, studentfinancewales.co.uk, saas.gov.uk and www.studentfinanceni.co.uk, depending on where you live.

Applications take six to eight weeks to process so get your child to apply as early as possible.

If your child is applying for the basic Maintenance Loan (if household income is at the top end and is therefore not considered as part of the application), you won’t need to do anything to support your child’s application. But if they’re applying for the part of the Maintenance Loan that does depend on your household income, you’ll be asked to give details of your income so SLC can work out how much money they can get.

SLC will need to know your income details for the previous 2016/17 tax year so it may help to pinpoint your P60. You’ll also need to have your National Insurance number to hand.

Once your child has applied, you’ll get an email with a link to create an account and submit your income details. You must use your own account – you can’t use the same account as your child or partner.

Once you’ve created an account or logged in, you can give SLC your income details for the 2016/17 tax year. SLC will confirm these with HMRC. Most parents don’t need to send any evidence of their income, but sometimes you may be asked. Don’t worry if this happens – it’s a normal part of its checks to make sure your child gets the right amount of student finance.

When will my child receive their funding?

The Maintenance Loan is paid directly to your child in three instalments in line with term dates. The first instalment is usually in September, shortly after they’ve started their course, the second in the New Year and the final instalment is around April time.

Once they’ve registered at uni, the Tuition Fee Loan will be paid directly to their university or college in three instalments at the start of each term.

How do repayments work?

Interest is charged on student loans from the day they receive the first payment into their bank account or to their university or college, until the loan is repaid in full or cancelled.

This year’s starters will face an interest rate of 6.3% on loans as soon as they’re taken out. It’s linked to the RPI measure of inflation from March plus 3%, while interest for those who have graduated is calculated as RPI plus a maximum of 3%.

The Maintenance Loan and tuition fee loan has to be repaid, but not until they’ve left university or college and their income is over the repayment threshold. The threshold and write off periods vary depending on where the child lives and when they took out the loan, but they’re cancelled 30 years after your child becomes eligible to repay – even if they haven’t repaid a penny. Their debt can’t be passed to anyone.

The current repayment threshold is £25,000 a year in England (£2,083/month or £480/week) and if they are earning under the threshold they won’t have to repay .

If they earn over the threshold, they’ll repay 9% of anything they earn over £25,000. For example, if their income’s £27,000 a year, they would repay approximately £15 per month. It doesn’t matter how much they borrowed – £30,000, £40,000 or £50,000, the amount they repay would stay the same.

What if my child wants to study part time?

For the first time in the 2018/18 academic year, part time students can apply for a Maintenance Loan to help them with living costs.

The funding will be available to new students starting their courses on or after 1 August 2018. Part time students can also apply for a Tuition Fee Loan and extra help is available for students who have a disability.

How much funding they’ll receive depends on where they’ll live while studying, household income, the course ‘intensity’, ie how many module credits they’ll study (must be over 25% to qualify).

To apply, your child should visit www.gov.uk/studentfinance each year of the course.

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  • The Scholarship Hub

    Also worth mentioning that there are hundreds of thousands of pounds worth of scholarships available which reduce the debt and expenses and don’t have to be paid back. Despite popular belief there are scholarships offered for all sorts of reasons, not just academic merit or financial need, so it is worth taking a look to see what your sons/daughters could be eligible to apply for.
    https://www.thescholarshiphub.org.uk

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