Even today, student loans are one of the biggest concerns of every individual seeking higher education at a University. There are all kinds of myths and misinformation surrounding the government student loan which is available from the Student Loan Company, who supply the vast majority of student loans in England. In this short guide, we look to try and bust some of the myths about the student loan and make your transition to higher education easier by arming you with the right information.
Students are usually put off from studying at University because of the mentality that they can’t afford it. But, in essence, as long as you’re eligible for a student loan from the Student Loan Company, you may find that affording University is much less of an issue than you believe. Don’t get us wrong, tuition fees are constantly on the rise and becoming a serious issue, but you don’t technically pay it – and, potentially, you may never pay for it.
Confused? Perfectly understandable. Tuition fees for most Universities in England run around £9,250 per academic year (sometimes more, sometimes less, depending on the University and course). With a student loan, your tuition fee can be paid for you (which most eligible residents of England will opt for). This tuition loan that you take out will never see your bank account. Student Finance England (also known as the Student Loan Company), pay your University directly once your University has told them that you’ve completed both of your enrolments (online and face-to-face).
A similar thing happens with your maintenance loan. A maintenance loan is used for a student’s living costs over the academic year. The current maintenance loan for the 2018/2019 academic year ranges from £7,324 to £11,354 depending on where you’ll be living while studying at University and whether you’ll be spending a year abroad during your course to study. Most students end up applying for up to £8,700, which is the maintenance loan available for students that are living away from their parents while studying, but outside of London.
The maintenance loan is paid directly to your bank account, typically in three instalments over the academic year. You’ll usually see it in late September (after you’ve enrolled), early January, and mid-April. If you haven’t received your loan at the start of your academic year, check that your University has told Student Finance that you’ve fully enrolled.
“But aren’t I going to be £50,000 in debt?” That’s a good question, and it has a bit of a tricky response. Technically, yes, you will be in debt. But! Student Loans are not seen as a standard credit loan by any company at all. Banks, other financial providers, employers… None of these individuals will take your student loan into account for a really long time. Unless you jump out of University and immediately start earning £21,000 a year.
Once you are earning £21,000 a year, you’ll pay back 9% of your earnings towards your student loan. You won’t see this money at all. Your employer will liaison with Student Finance and pay them straight from your earnings.