As the name suggests a student loan is a monetary support given to fund university study or higher education of first time higher education takers. The United Kingdom offers many such loans through government and private companies. The loans are offered to cover the tuition fees and living costs of the student. The benefit with student loans is that they charge lower repayments while you study and is available even if you have a bad credit score. The loan will depend on course type, family income and personal circumstances.
Types of loans for the first time students:
Loan for tuition fees: If you need financial support for your first undergraduate qualification then apply for this loan. Normally these are offered by government backed loan provider companies. You are eligible for a loan up to £9,000 for government colleges and £6,000 for a private university. The loan amount for the tuition fees is independent of your household income.
Maintenance loan: Along with this, you can apply for maintenance loan which include your living costs even if you are living with your parents. You may also get extra support like scholarships. In this case, the loan amount would be calculated as per your household income and the place of stay.
Repayments for the first time student loan applicants:
The best part about student loans is that the repayment is based on your future income and not how much amount you borrowed. You don’t need to bother with the repayments until you have finished your studies and start earning an amount that is equal to or more than £21,000 per year.
Just like tax gets deducted from your income, same way the repayments will be deducted from an employed person’s salary. The exact amount would be 9% of your income over £21,000. This means that you need to pay 9% of the difference of your salary and £21,000.
For self-employed people, there are different arrangements. If your income is less than £21,000 then you do not have to pay anything until you reach the £21,000 a year mark. Also, if there is any outstanding balance after 30 years then it is written off and you don’t need to pay it.
Students planning to stay abroad for more than three months must inform Student Finance England about their place of stay and their income. This will help loan providers assess whether you will reach the repayment threshold or not and hence would be able to pay a certain amount. All repayments have to be made in favour of Student Finance England.
Interest rates for first time student loan applicants:
Interest would be charged from the day the loan providers make their first payment to the day of full repayment of the loan. You need to pay an interest equal to the Retail Price Index plus 3%. You need to pay this during your study period and until the month of April after you leave your college.
If you are earning below £21,000 then you need to pay only the RPI. This amount needs to be paid starting from the month of April that falls after your course duration. If you’re earning goes above £41,000 then you need to pay RPI plus 3% of your income.
Extra support beyond the loans:
Scholarships and bursaries:
If you need additional support than these loans then the university can make arrangements for it. It will depend on the individual’s circumstances and would be provided after complete verification. You can get bursaries and scholarships from the university you choose to study. The decision of what to offer you is solely taken by the university.
Students having financial dependents like children or spouse are entitled to this grant. For childcare, the grant offered is £155.24 per week for a single child. This would be raised to £266.15 if you have two or more children.
There is also a provision of offering £1,573 as Parents Learning Allowance but to give it or not is left to the discretion of the university.
Disabled Student Allowances (DSAs):
Students with any form of disability can easily get DSAs as well as other support from their institution. The exact amount will depend on your requirements. You don’t need to pay back your DSAs.
Keeping all the details in mind, get a loan that gives you maximum benefits. For more details on types of student loans, check freepricecompare.com or call us on 02034757476.