If you’re going to university, chances are you will have to deal with the world of student finance.
What is it?
Student finance provides funds for students to go to university. It is often referred to as your ‘student loan’, as it is a type of borrowing.
It is made up by two components: tuition fees and maintenance loan.
Tuition Fees
UK universities can charge up to £9,250 a year in tuition fees, and the majority charge this maximum amount. The good news is that you’ll pay nothing upfront if you’re eligible for student finance, which most students are.
Tuition fees are paid by the Government on your behalf, directly to the university. You will then repay this loan to the Government after you’ve completed your studies, providing you’re owning over a certain level of income.
Maintenance Loan
The maintenance loan is there to help you with you living costs. Pretty much everyone going to university full time away from home will have to get a maintenance loan, because living is expensive.
Unlike with tuition fees, this loan is paid directly to you, as it is you who has control over the spending of it… so make sure you don’t get carried away! You will have to make sure you stretch it far enough to cover things like:
- Food
- Rent
- Utility bills
- Subscriptions, e.g, phone
- Cleaning products
- Travel
- Membership fees
- Textbooks
- Nights out
Check out our free budget calculator if you’re worried about staying on top of your spending at university.
How Much do I Get?
The level of maintenance loan you’re entitled to depends on a few things:
- Whether you will be studying at home (you will get lower if so)
- Whether you’re studying in London (you will get higher)
- Your level of household income (it’s means tested, working on a sliding scale so that the higher your household income, the lower the loan)
The maximum maintenance loan for the 2022-2023 academic year is currently £9,706, for those studying away from home but outside of London, but this may well change by the next academic year.
To qualify for this maximum amount, your household’s annual income would need to fall between £0 and £25,000.
If you’re unsure of how much loan you’d qualify for, you may wish to check out the student finance calculator on the Government website.
Making Repayments
Student loan acts as a graduate tax as you only start making repayments when earning over a certain threshold. If starting university on or after 1st September 2012, you only start making repayments if your annual income is more than £27,295 before tax.
Once you start repaying your loan (and the interest added to it), you pay it back at a rate of 9% of the amount of your salary over the threshold.
For those studying from September 2023 onwards, loans will be written off 40 years after repayments started, so if you don’t manage to pay it off in that time, the debt is scrapped.