Student loans explained

Student loans defined

If you’re planning to go to school, it’s your decision a loan to cowl your tuition charges and assist pay your dwelling prices. Here, we clarify how student loans work in England and Wales.

Where do student loans come from?

Your student loan will come from the federal government by way of the Student Loans Company (SLC). The SLC is a not-for-profit organisation that offers with loan functions, funds and repayments.

Tuition loans and upkeep loans: what’s the distinction?

A tuition loan is used to pay your training prices. You’ll by no means see this cash, because it will get despatched straight to the college. Tuition charges are at the moment capped at £9,250 per yr.

Your upkeep loan shall be despatched to your bank account. This cash ought to allow you to cowl the prices of dwelling, together with hire, groceries, transport and coursebooks.

In the 2018/19 educational yr, you will get a upkeep loan of as much as:

  • £7,324 should you’re dwelling at dwelling

  • £8,700 should you’re dwelling away from dwelling outdoors London

  • £11,354 should you’re dwelling away from dwelling inside London

  • £9,963 should you learning overseas for a yr whereas on a UK course

Can I get a grant?

A grant is cash you don’t need to pay again. Grants was once out there to students from low revenue households, however these had been changed by bigger loans in 2016. The quantity you possibly can borrow is determined by how a lot your mother and father or guardians earn – usually, the decrease their revenue, the larger your loan.

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Grants are nonetheless out there to students in sure circumstances, like these with dependents or a incapacity.

How do I get a student loan?

To apply for a student loan, you’ll want to finish an software on-line by way of the federal government’s web site.

The software will ask you for issues like your title, deal with, college course, passport particulars, emergency contacts and the revenue of your mother and father or carers. It can take some time to fill all the things in, so give your self loads of time earlier than the deadline.

For most programs beginning in September, the deadline to use for student loan is late May. You can nonetheless apply as much as 9 months after the beginning of the educational yr, however which may delay your fee.

How do I pay my college?

If you’ve been accepted for a student loan, you needn’t fear about paying your college for tuition, because the SLC pays it instantly.

Paying for college lodging is a special matter. You college ought to clarify find out how to pay them instantly to your residence. This is often completed each time period, and also you might be able to arrange a direct debit. The upkeep loan is there that can assist you with this value – simply bear in mind to save lots of sufficient of it, and to pay on time.

Repaying my student loan – how does it work?

When will I repay my student loan?

The earliest you’ll begin repaying your student loan is the April after you graduate. You’ll solely have to make funds when you earn greater than £25,000 a yr.

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If you haven’t paid again your student loan after 30 years, the SLC will write any remaining debt clear.

How a lot will I pay?

You pay 9% of any earnings over £25,000 per yr. This means the extra you earn, the bigger your funds shall be.

For instance, should you earn £30,000 in a yr, you’ll pay 9% of £5,000 (£450). If you earn £40,000 in a yr, you’ll pay 9% of £15,000 (£1,350).

How will I repay it?

The SLC will hold monitor of your revenue utilizing your National Insurance quantity. When you begin a job, they’ll inform HMRC, who’ll notify your employer. Your employer will then take student loan repayments out of your wages – so it’s rather a lot like paying taxes.

If the SLC thinks they’ve incorrect or incomplete information about your revenue, they might ask you to replace them. You’ll additionally want to inform them should you’re overseas for greater than three months. It’s a good suggestion to maintain them up to date, or they might overcharge you curiosity.

How a lot curiosity will they cost me?

Interest will begin being added to your loan from the second you get it. While you’re learning, the rate of interest would be the Retail Price Index (RPI) plus 3%. After you graduate, the speed would be the identical or much less, relying in your revenue. Just bear in mind that the RPI can change.

Interest fees in your student loan don’t have an effect on how a lot you repay every month. They simply have an effect on how a lot you owe general.

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