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Student Finance – The Facts!

Student Finance – The Facts!

There has been a lot of press recently about how much Universities can charge and some of our clients with children thinking of going had some questions. We got our latest ACCA student to do some some research and provide useful facts and a guide that could help.

Find out the truth about the changing costs, how your repayments are calculated, ways to help finance and many more useful tips along the way.

 

Tuition Fees:

Universities can charge a maximum of £9,000 per annum for full-time courses and a maximum of £6,750 per annum for part time courses, although not all universities will charge these maximum amounts. Students are able to apply for a loan to cover the full cost of their tuition through Student Finance England. Once an application has been made and the student has secured a place at their chosen university, this loan will be paid directly to the university in instalments.

You may have heard that the government is planning to allow universities to increase fees in line with inflation if they demonstrate high quality teaching; Whilst true, this will not affect students applying for courses starting in September 2016.

What About Living Costs?

To help pay for their living costs whilst studying – such as rent, food, books and travel – students are able to apply for a maintenance loan. The amount of loan they will be eligible to receive is based on 1) Where they live; 2) The household income of the parent/guardian they live with the most; and 3) Where they choose to study.

A detailed guide as to the amounts they may be eligible to receive can be found here: https://www.gov.uk/government/publications/financial-support-for-full-time-students-of-higher-education-in-2016-to-2017/financial-support-for-full-time-students-of-higher-education-in-2016-to-2017

Each year this loan gets paid straight into the student’s bank account in three instalments, one at the start of each university semester.

Repayment:

Students will only begin repaying the money they have borrowed once they are earning over £21,000. Once their earnings have crossed this threshold they will repay 9% of their income each month off the amount they have borrowed, until the loan is fully repaid, or 30 years (from the start date of their course) has elapsed. Any amount which has not been repaid after the 30-year period will be written off.

Repayments are deducted from earnings through the UK Tax System, so the student needn’t worry about making the repayments themselves. In this sense, the repayments very much resemble a graduate tax as oppose to a loan.

Interest:

While studying, the student will be paying interest on their loan at a rate of 3% + RPI (Retail Prices Index rate of inflation). From the April after finishing their course, interest will be linked to the amount they are earning, with the maximum interest rate (RPI +3%) applying for incomes over £41,000.

Bursaries and Scholarships:

These are non-repayable grants offered by universities to attract students to come to their institution, with the amounts offered varying by institution and subject. Bursary values are based on household income, whereas scholarships are based on the grades the student receives at A-Level. Scholarships can also be offered by companies and charitable institutions. A good starting point for researching scholarships and bursaries can be found here: http://www.scholarship-search.org.uk.

Hardship Funds:

Many universities have hardship funds to help students who experience financial difficulty during their course. Students should approach the Dean of Students at their university for advice if they do find themselves in difficulty.

Student Bank Accounts:

Many students open a student bank account whilst studying. Usually banks will offer special perks to students, such as interest-free overdrafts and freebies, including free railcards. A good guide to student bank accounts is offered here: http://www.moneysavingexpert.com/students/. Look out for the 2016/17 guide which should be available in the new year.

When Can Students Apply for Student Finance?

Applications for Student Finance open in February 2016 and should be completed by the end of May 2016, in order to be sure of money being transferred into their account at the start of their course. Once applications open students can apply through the following link: https://www.gov.uk/student-finance-register-login.

Supporting an Application as a Parent:

Once the student has made their application you will be sent an email asking you to confirm your income. You can do this online by inputting your details and National Insurance number. In some circumstances you may be asked to provide evidence. For example, if you are self-employed you may be asked to send a self-assessment tax return. In this case the tax year used in assessment will be the one ended April 2015. Further details, including the address to send supporting evidence, can be found here:  https://www.gov.uk/apply-for-student-finance/parents-and-partners.

If you are expecting a drop in income of 15% or more, then you can ask for income details for the current tax year to be assessed instead.

Further Information:

A comprehensive guide on student finance, including finance for NHS courses, can be found at: https://www.gov.uk/browse/education/student-finance

About the Author

Rowan is our latest ACCA Trainee and finished University a year ago with an impressive first in Accounting and Finance.

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