If you are considering going to university in 2015, don’t let student finance be a barrier. Whilst the arrangements for student finance in England may have changed beyond recognition in recent years, they are often vastly misunderstood. The headline figure that appears to grab everybody’s attention is the £9,000 tuition fees that the majority of universities are now charging. It’s a scary prospect, after all debt is something many of us instinctively try to avoid. However, whilst a university education isn't cheap, you really shouldn't let this worry you or stop you. And here’s why…
Is your Student Loan actually a debt?
Well, seeing as I've already mentioned the dreaded D word, maybe this is where I should start. Whilst it is still called a debt, it’s conceptually very different to a normal debt and, in fact, it’s probably best not to think of it as a debt at all but rather more of a graduate tax.
There are no debt collectors and it doesn't go on your credit file. So you don’t need to worry about this loan having a negative impact on your credit score and the bailiffs knocking on your door!
If you’re not earning anything, you don’t have to pay it. If you’re not earning over £21,000, you don’t have to pay it. And when you do begin to earn over this threshold, you’ll only pay a proportion of what you are earning; currently 9% above this threshold. Further to all this, the debt is also written off after 30 years – even if you’ve never paid a penny.
So, all things considered, you should never really worry about how much your student loan is and how you going to pay it back. It’s all irrelevant because you’ll only pay back what you can afford. The key thing to remember is that your repayments are based on how much you earn and not how much you borrow.
Buy Now, Pay Later
If you’re still concerned about getting a student loan and you’re considering either paying upfront or not going to university at all, my advice in both instances would be to go for the loan and to go to university.
You don’t have to pay your tuition fees upfront, so nobody should feel that they can’t afford to go to university. It doesn't matter how much you currently earn or how much your parents earn, you should always go for the tuition fee loan remembering that you may never pay back what you borrowed. It really makes no sense to pay these fees upfront as you could just end up paying for something you never needed to.
In my role as an education liaison advisor, when representing the University at higher education fairs and events, I've occasionally had students ask me how much the tuition fees are at Chester. It seems like a perfectly logical question, after all, in any other consumer market, we often use cost as a basis for choosing one product over another. However, when it comes to your education, I’d strongly advise against doing any sort of price comparison but rather picking a degree that you like the sound of in a university environment where you feel you’ll fit in. Again, this advice is supported by the fact that your loan repayments will be based on your future earnings rather than the amount you borrowed. Therefore, in the grand scheme of things, the price difference between one degree and another is immaterial. The real cost to you is based on how much you repay.
On several occasions throughout this blog, I've alluded to the fact that your repayments will be based on your future earnings. But, what does this mean? And how do you ensure you are repaying the correct amount? I've also suggested that the arrangements for student finance should be viewed more like a graduate tax. Well, in essence, that’s exactly what it is and that’s precisely why you shouldn't worry about not being able to afford your repayments.
All student loan repayments are calculated and paid through your payroll, meaning that these payments will come out of your monthly salary alongside your income tax and national insurance contributions. So the amount you have left over in your pocket each month already has your loan repayments taken out. No hassle there then?
A helping hand
Of course, so far we have made heavy mention to having the funds in place to cover your tuition fees by means of a loan from the Student Loans Company, but what about your living costs? What help is available for this?
Well, without going into too much detail here, this is in fact the same loan scheme with the maximum amount available for 2015/16 being £5,740. The full allocation of the maintenance loan is means tested, meaning that your residual household income is assessed to calculate how much of this loan you are entitled to. However, a partial loan, of 65% of this amount, is available without Student Finance having to assess your household income.
As well as a maintenance loan, you may also be entitled to a grant. Again, this is means tested with the maximum grant available in 2015/16 being £3,387 if your household income is £25,000 or less. If your annual household income is between £25,001 and £42,620, you will be eligible to receive a partial grant. The main thing to remember here is that a grant does not have to be paid back! Yippee… happy days.
As well as this, you may also be entitled to one of Chester’s excellent bursaries or scholarships! My advice here is to do your research and look into what you may or may not be entitled to. If you decide to visit Chester on an Open Day or an Applicant Day, make sure you attend one of our finance talks and find out more about the help available to you at Chester.
Is it affordable?
So, can you afford to go to University? The important thing is that you know all the facts about student finance and hopefully this blog has gone some way to explaining how it all works. It’s a big decision deciding whether or not to go to university and only you can really decide whether it’s an investment worth making. Weigh up all your options and then make a choice that is right for you. It isn't cheap, but please don’t let student finance stop you from fulfilling your dreams and ambitions.
Want to know more?
If this blog has got you thinking about student finance, there is a wealth of information on-line. Our Applicant Space has a dedicated Money Matters section where you can watch my colleague Laura explaining the basics of student finance. There’s also a useful video guide from the Independent Taskforce on Student Finance, where finance expert Martin Lewis clarifies the latest changes to student finance.
If you just want to get on with applying, further details are available at gov.uk