With university fees at almost £10,000 per year plus living costs on top, the prospect of committing to three or four years of study can seem as if the financial burden outweighs the benefits. But graduates often earn more than school leavers and payback terms are linked to earnings so it can be a worthwhile investment. Find out what you need to know about student finance, what loans are available and how to apply.
Costs to consider
There are two types of costs when going to university:
study costs – these include your child's tuition fees (for UK residents, tuition fees can cost up to £9,250 a year) and other study-related costs, such as text-books and equipment
living costs – these include your child's accommodation and other day-to-day expenses, such as food, bills, travel expenses (if they don't live on campus) and going out
What support is available
To help with covering these costs your child can apply for student finance, which consists of two types of loans:
tuition fee loan: the loan to cover the annual cost of the university degree and is paid directly to the college or university - most students will be entitled to a tuition fee loan if studying at an eligible college or university (which most are!)
maintenance loan: the loan to cover cost of living such as accommodation, food, course materials and is paid directly into your child's bank account - the loan is influenced by parental earnings. Simply put, the higher the family income, the less money granted:- parents will be expected to cover any shortfall.
Repayments for both types of loan are linked to earnings and explained in more detail later in this article.
Your child may also be able to apply for grants and additional support if they’re eligible for certain benefits, if they are disabled or need help with childcare - more on that later.
How to support your child's application
Student Finance England is the organisation responsible for providing tuition fee loans and maintenance loans to students at university in the UK. Applications for tuition fee loans and maintenance loans must be made separately.
Loan applications are made to the country of home residence, not the destination university. So, if your child lives in Scotland and is going to university in England, applications are made to Scotland.
Timing
Applications for student finance can be made prior to receiving results and confirming a university offer. So, once application to UCAS has been completed, your child can make a provisional application for student finance whilst waiting on results. Loan applications must be made at least eight weeks before the course commences, otherwise payment may be delayed: don’t forget this covers both types of loan - tuition fees and maintenance loans. We recommend encouraging your child to apply early to ensure loans are processed on time.
Parental income
The tuition fees (up to £9,250 per annum) are paid via student finance direct to the university (once the place has been accepted) and parental earnings do not impact this.
The maintenance loan is influenced by parental earnings. However, assessment is made on “residual” income – i.e. the money left over after debts and expenses have been paid (so not pre-tax earnings or even net income). This money is paid termly directly to the student, so make sure they know how to budget.
In most cases, you won't need to send student finance evidence of your household income as they check your details with HRMC.
Where parents are separated or divorced, income is assessed on the parent with whom the child resides and (if applicable) their current partner (irrespective of whether or not that partner is responsible for the child). Income for the other biological parent is not assessed.
Other financing options
It’s worth reviewing scholarships, grants and bursaries to see whether you child might qualify for additional income, particularly if they are studying for specialist degrees such as medical, social work or teaching. A full list of what's available, including details on how to apply can be accessed here.
Loan Repayments
Repayments are collected via Student Loans Company, who work alongside HMRC to collect repayments in line with earnings after the degree is complete.
Repayment terms are very generous, so avoid thinking that student loans are like conventional bank loans or even a mortgage. Importantly, no money is taken until earnings reach a certain threshold, they are paused if earnings drop below that threshold (maternity or redundancy), they are not evaluated on partner earnings and they are wiped clean after 30 years. A summary of the terms are:
No payments are made until the student is earning £27,295 in the April after graduation;
Once they qualify for payment, they repay only 9% on any amount earned over the threshold (so if they earned £27,395 in April after graduating, they would pay £9 a month);
Repayments are docked directly at source and they cease if salary drops below the threshold;
Interest rates apply from when the loan is given (i.e. start of the degree);
Any outstanding debt is wiped clear after 30 years.
Learning difficulties and entitlements
For students with a learning need, mental health issue or disability, there’s the option to apply for dedicated funding to help with extra costs associated with their condition. It’s called Disabled Students’ Allowances (DSAs).
This is in addition to student finance and there is no need to repay the money awarded. It may cover specialist equipment (i.e. a computer, voice recognition software, dictaphone), non-medical helpers (i.e. proof reader, note taker, sign interpreter), extra travel (i.e. the cost of taxis if you child can’t take public transport) and / or accommodation contribution (i.e. if the bathroom needs to be adapted to meet your child’s needs). It is applied to costs incurred directly because of undertaking the course (rather than costs that would be accumulated anyway) and costs incurred over and above that of those made by any student without a similar disadvantage.
The allowance is assessed not by household income but individual needs and, upon eligible application, it will be necessary to undergo a “study needs assessment” at an approved DSA centre (they will send you a link identifying local assessors). However, if a student is applying for both financial support and DSAs, they must complete their student loan application through Student Finance England first (as explained in Understanding Fees section) else they will not be able to make the online application.
Don’t forget , if your child has an education and healthcare plan (“EHCP”) this will lapse on higher education, but support will be available through the DSA.
Whilst notification of eligibility can take place relatively quickly, it can take a long time to process and complete all stages of the application (up to fourteen weeks), so do apply early. To qualify for DSAs, a student must be an undergraduate and studying for at least one year (this can be part time, depending on the “course intensity”) and have written evidence from a qualified specialist about their condition.
The maximum allowances can be found online, however, very few students are entitled to the full benefit and most receive much less. Money is usually paid to the organisation providing the service although in some cases it may be paid to the student’s bank account. Refunds and reimbursements will not be given for any costs incurred prior to the appropriate application and approval systems. If awarded the cost of a new computer, it will be necessary to contribute £200 towards this.
It’s not necessary to inform the college or university if your child receives DSAs; however, it might be helpful for them to know to ensure your child gets all the support available. In addition, colleges and universities will have a disability adviser who will be able to give you help and advice about your child’s entitlements.
Conditions that might qualify for DSA include:
social, emotional and mental health difficulties (such as ADD, ADHD)
sensory and / or physical needs (such as visual impairment or equipment to support a physical difficulty)
cognition and learning difficulties (such as dyslexia or dyspraxia)
communication and interaction needs (such as difficulties with speech / language, Asperger’s Syndrome, autism)
some long-term health conditions (such as HIV, cancer, chronic heart disease).
We always love to hear from you, so do let us know if there are any subjects you’d like us to chat to you about. Stay safe and keep happy, Vanessa and Darius - info@theparentsguideto.co.uk
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