Funding higher education and paying it back
One of the popular misconceptions surrounding HE is that it’s for the wealthy few. This is certainly not the case as HE is an option for anyone with capability and motivation. The majority of students in England fund their studies using the student loans system.
Tuition fee loans and maintenance loans
To cover the costs of HE in England, there are two types of student loan available: a tuition fee loan and a maintenance loan.
Tuition fee loans are there to cover the cost of the course, while maintenance loans are available to help with the everyday costs of living, for example accommodation, food, utility bills and socialising etc.
How much can students borrow?
Anyone who meets the eligibility criteria can apply for a tuition fee loan to cover the cost of their course. The amount being charged for the course is the amount an applicant would apply for. Payments for tuition fees are made directly to the HEI, not the applicant.
For maintenance loans, the amount students can borrow depends on their family’s household income and whether they’ll be studying inside or outside of London.
If they’ll be living away from home (and outside of London), a maintenance loan of up to £9,488 per year is available for households earning £25,000 per year or less.
If they’re going to university in London, the maximum loan amount available is £12,382. This is to account for the higher cost of living in the capital.
The table below shows how much students can expect to get in various circumstances.
If the household income is more than £25,000, the amount they will be eligible for will be lower. Due to the higher household income, it is expected that parents or carers will help. Another option that many students choose is to work part-time.
Who can apply?
Generally speaking, if the applicant is a UK national, or has ‘settled status’ in the UK, they can apply for a tuition fee loan and/or a maintenance loan.
Applying for a loan
For most courses, applications should be made by the end of May in the year that the course will begin; however, it is possible to apply for a loan up to nine months after the course start date.
You will be required to provide a ‘Current Year Income assessment’, Student Finance England have updated their process in light of COVID-19, (this also applies if: a parent or partner has retired or got a different job), so if you expect your household income to drop by 15% or more compared to the tax year we’d normally use, you can ask us to calculate their student finance based on your estimated income for the current tax year instead. Find out more here.
How and when does it get paid back?
When it comes to repaying these loans, both are added together – that’s if the student has borrowed both. Repayments start in the April after they have finished their studies and are earning over a certain amount. As of April 2019, this threshold will be £26,575.
Repayments are not linked to how much a student borrowed; they are based on how much they earn. This figure is calculated by HMRC and automatically deducted from a person’s pay packet.
After 30 years, whatever amount is outstanding is written off.
Q. What if they earn under the threshold?
Then they won’t repay anything until they’re earning above it.
Q. What if they never earn over the threshold?
If they never earn above the threshold, they’ll never make a repayment!
Q. What if their wages rise above the threshold?
Should a person’s income rise above the threshold, their repayments will be 9% of whatever they earn above it (not 9% of all of it).
Q. What if they lose their job, or their wages drop below the threshold?
If for any reason their income drops below the threshold (for instance, a change of job or a reduction in hours occurs), the repayments stop until their income rises to above the threshold again.
How much are monthly repayments?
The table below shows the approximate monthly repayments for a range of salaries. Click to enlarge.
Financial support for eligible students
There’s a range of financial support for eligible students. Use the links below to find out more:
- Hardships funds
- Disabled Students’ Allowance
- Bursaries and Scholarships
- Learning Support Fund for NHS Students
Find our more: HE Knowledge hub Podcast: Episode 1 – Student Finance
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