Student loans are a kind of financial help awarded specifically for students to pay their tuition and accommodation fees. This type of loans is very similar yet just as much different from the regular personal loans people get at banks.
The U.K. government and private entities combined a great lot of financial help offers for undergraduate and postgraduate students. Some of them cannot cover the whole higher education expenses, others offer more than necessary, it all depends on the source and program.
There is a popular belief that once applying for a loan, young people get themselves into a lifetime of debt and that repaying a student loan can take twice as much money as the actual study fees would. These are simply made-up stereotypes that have little in common with reality. In fact, the interest rates are reasonable when taking a loan from the government and those you can sign up for 15+ years of repayments, most people choose shorter periods to get free of the debt as soon as possible.
Usually, student loans can be divided into tuition fee loans and maintenance loans for accommodation. While the first loan usually goes straight to the university and students don’t get to even see the money, the second type of help comes as a transfer to a student’s bank account. The average numbers of the study year of 2018-19 for living loans are as follows: students living at home get up to £7,324, students living away from home outside London – £8,700, in London – £11,324, studying abroad – £9,963. The exact number of money a student gets depends on the place of studies and family income.
Speaking of tuition loans, full-time and part-time students also face major differences in the maximum amount of money received as a loan. In general, it is up to £9,250 for full-time students and £6,935 for part-time students (studying at least 25% of the equivalent full-time course).
The offered numbers mainly concern governmental based loans offered by public lenders such as a Student Loans Company that is governmental-supported. At the same time, private are free to set their own limits. Loans from private lenders are usually the choice for postgraduate students who have to finance studies on their own. First-time students usually apply for governmental support, often starting with the SLC, and then go to private companies only if completely necessary.
Applying for a student loan is nothing complicated but it takes time to research the matter. The most important thing about loan application to remember is deadlines. However, there is one more step before that helps to determine the options – an online student loan calculator that estimates what to expect. Such a tool takes into account the basic information about the program, tuition fees, and certain interest rates to calculate the final sum.
Usually, loan processing takes at least 6 weeks or more to gather the papers and send an application. So, the best approach is to start working on it as soon as possible. The usual deadline for student loans is 31 May, though some programs may set up their own dates. It is necessary to check the information about each of them separately.
Students from England can apply for a loan online on the Student Finance England website. The students from other countries have the same opportunity but on different sources including Student Finance Wales, Student Finance Northern Ireland, and Student Awards Agency Scotland. All those websites offer all necessary forms, information about student loan interest rates, and lists of documents needed for an application.
Among the papers students need is a UK passport to include the details in the application. UK students do not have to send the passport itself. However, citizens of the EU have to send their passports or ID cards directly to the Student Finance England office. The same rules apply all over the UK.
These services are responsible for governmental support presented by loans. It greatly differs from the scholarships and bursaries application process that is more solitary and greatly depends on the chosen program. A student loan always requires the same documents and differs only in application forms.
The interest rates in the UK are calculated using the so-called retail price index that remains unchanged for all companies and programs plus a certain percentage of additional interest. The RPI is set annually in March for the whole upcoming year and cannot be changed in-between. As of now, the RPI is 3.3% compared to the last year’s 3.1%.
In addition to the retail price index, the governmental student financing adds 3% of interest above which accounts for 6.3% of loan interests in total. This is the number for students who still study. Once you graduate, the rate depends on the income. All governmental loans for tuition fees have a common rate. When talking about private lenders, the number tends to change from bank to bank. Some of the offers have interest rates that can reach up to 16-18%.
Turning to private loans, we see more variety as companies set their own rules and requirements and provide their own forms. Admittedly, there are more loan options at private lenders as they are more flexible and willing to set individual terms of repayment that somewhat compensates huge interest rates.
A student maintenance loan is somewhat different from the tuition one. This is the funding for living expenses that is directly sent to a student account. Usually, the money is sent three times a year. The average amount of money a student gets is £3,000. The interest rate of maintenance funding using the inflation rates and adding 3% extra.
To think that a student has to start their student loan repayment period immediately is a mistake. The study years should be devoted to academic progress and not worrying about finances. The government gives young people time to finish their studies and find a stable job before demanding its money back. So, students do not have to repay a loan until the following April after graduation and until their annual income is at least £25,000. So, there is no hurry during and right after the studies and the focus should remain on the main aim.
The stereotype that a student will be bound by the loan for the rest of their lives is false. The monthly payments will be calculated according to the income and can be covered above the sum when extra money is available. This rule concerns both types of student finance: maintenance loan and the tuition one. In case a student faces further financial difficulties, there are always several options to decrease the piled up debt.
The UK government Student Finance services offer two tuition fee loan repayment plans with the weekly/monthly thresholds that change once a year and offers a refund if the income changes during a year.
Private companies have a more varied array of options and the families can choose the most suitable one. Loans for students come from a variety of sources including banks and private companies that specialize in student finance alone. When choosing the repayment plan, the best option is to look through as many sources as possible to compare all options. Tuition expenses are great and will affect a family and a student for years to come.
Going through student loans company contact information, do not forget to look for the reviews on its services.