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Student loans: How do they work, what can I borrow and when do I pay it back? Student loans: How do they work, what can I borrow and when do I pay it back?
(3 months later)
Students in the UK will be heading to college or university this autumn amid a cost-of-living crisis. Students in the UK arrived at college or university this autumn amid a cost-of-living crisis.
Prices for energy, food, rent and other essentials are all increasing.Prices for energy, food, rent and other essentials are all increasing.
What financial support is available?What financial support is available?
How do student loans work?How do student loans work?
The details depend on where you live in the UK, but student loans are typically made up of two elements:The details depend on where you live in the UK, but student loans are typically made up of two elements:
a loan for tuition feesa loan for tuition fees
a maintenance loan to cover living costsa maintenance loan to cover living costs
Most people are entitled to the tuition fee element, which is equal to the annual cost of your course up to £9,250 per year, capped until academic year 2024/2025.Most people are entitled to the tuition fee element, which is equal to the annual cost of your course up to £9,250 per year, capped until academic year 2024/2025.
The maintenance loan is intended to cover accommodation, food, books and any equipment you need. It is means-tested, so the amount you get depends on your family's household income.The maintenance loan is intended to cover accommodation, food, books and any equipment you need. It is means-tested, so the amount you get depends on your family's household income.
You might get extra money if you are disabled or have children.You might get extra money if you are disabled or have children.
If you're under 25 and have no contact with your parents, you might be able to apply as an "estranged student". This means your parents' financial situation is not taken into consideration.If you're under 25 and have no contact with your parents, you might be able to apply as an "estranged student". This means your parents' financial situation is not taken into consideration.
How can I find out how much I can borrow?How can I find out how much I can borrow?
The amount of maintenance help available varies across the UK.The amount of maintenance help available varies across the UK.
Students from England can use the loans calculator on the Student Finance England websiteStudents from England can use the loans calculator on the Student Finance England website
Students from Wales can go to Student Finance WalesStudents from Wales can go to Student Finance Wales
Students from Scotland can go to Student Awards Agency ScotlandStudents from Scotland can go to Student Awards Agency Scotland
Students from Northern Ireland can go to Student Finance Northern IrelandStudents from Northern Ireland can go to Student Finance Northern Ireland
When and how do I apply?When and how do I apply?
Although the main deadlines for new and returning students have already passed, students can still apply for help for the 2022/23 academic year.Although the main deadlines for new and returning students have already passed, students can still apply for help for the 2022/23 academic year.
The process is different depending on where you live:The process is different depending on where you live:
The Student Loans Company processes all applications for students in England and WalesThe Student Loans Company processes all applications for students in England and Wales
Students in Scotland apply through the Students Awards Agency ScotlandStudents in Scotland apply through the Students Awards Agency Scotland
Students from Northern Ireland apply through Student Finance Northern Ireland.Students from Northern Ireland apply through Student Finance Northern Ireland.
The Student Loans Company says applications for both elements of the loan can still be made up to nine months into the first year of your course.The Student Loans Company says applications for both elements of the loan can still be made up to nine months into the first year of your course.
How do I get the money?How do I get the money?
The tuition fees part is paid directly to your university or education provider.The tuition fees part is paid directly to your university or education provider.
The maintenance loan is paid directly to your bank account. If you applied before the deadline, you should have the money before your course starts.The maintenance loan is paid directly to your bank account. If you applied before the deadline, you should have the money before your course starts.
How much interest will I be charged?How much interest will I be charged?
You're charged interest on the loan from the day you take it out, but the amount varies across the UK.You're charged interest on the loan from the day you take it out, but the amount varies across the UK.
It's important to understand that the terms and conditions can change after you have borrowed the money. It's important to understand that the terms and conditions can change after you have borrowed the money - any interest-rate rises will apply to all student loans not just new applications.
In England and Wales the interest rate while you are studying is calculated by adding 3% to the retail price index (RPI) measure of inflation. In England and Wales the interest rate while you are studying is currently calculated by adding 3% to the retail price index (RPI) measure of inflation.
In June it was announced that the rate of interest would be capped at 7.3% for new students who start in September 2022. The 7.3% interest rate cap was calculated using predicted market figures, but the government have since said that, from September, the cap will be set at 6.3%. The rate had been predicted to jump to 12% because inflation has risen so much. From December 2022 until March 2023, the interest rate will be capped at 6.5%, up from 6.3% in September.
From September 2023, the interest rate for new students should be fixed at just RPI.From September 2023, the interest rate for new students should be fixed at just RPI.
For courses in Scotland, the rate is currently 1.5%, For courses in Northern Ireland, the rate is also currently 1.5%. For courses in:
Once you have finished studying, the interest rate you're charged depends on how much money you earn. Scotland, the rate is 3.25%
Northern Ireland, 4%
The amount graduates pay back will depend on how much they earn.
Cost of living crisis: Concerns over impact on studentsCost of living crisis: Concerns over impact on students
What is inflation and why is the cost of living rising?What is inflation and why is the cost of living rising?
When do I have to start paying my student loan back?When do I have to start paying my student loan back?
You don't have to start repaying your loan until you earn a certain amount of money after graduation.You don't have to start repaying your loan until you earn a certain amount of money after graduation.
Payments are made automatically through the tax system.Payments are made automatically through the tax system.
You generally repay 9% of the amount you earn over the threshold.You generally repay 9% of the amount you earn over the threshold.
However, the amount you can earn before you have to start repaying differs across the UK.However, the amount you can earn before you have to start repaying differs across the UK.
In England and Wales, the threshold is currently £27,295, but will will drop to £25,000 in September 2023.In England and Wales, the threshold is currently £27,295, but will will drop to £25,000 in September 2023.
In Scotland the threshold is already £25,000, and in Northern Ireland it's £20,000.In Scotland the threshold is already £25,000, and in Northern Ireland it's £20,000.
You don't repay anything if you earn less than the threshold.You don't repay anything if you earn less than the threshold.
When are student loans written off?When are student loans written off?
Under the current system, student loans are typically written off after 30 years, however much is still owedUnder the current system, student loans are typically written off after 30 years, however much is still owed
However, the government plans to increase this period to 40 years.However, the government plans to increase this period to 40 years.
You still have to repay your student loan if you leave your course early.You still have to repay your student loan if you leave your course early.
Some people may opt to make extra repayments to clear some or all of their loan early - there's no penalty for doing so.Some people may opt to make extra repayments to clear some or all of their loan early - there's no penalty for doing so.