Most soon-to-be freshers will need a loan to help them pay their way while they study.
Are you heading off to uni this year? Do you know what kind of loans you are eligible for? Are you worried about the interest you might pay on that borrowing? Read on for the moneysupermarket.com guide to student loans.
What can I borrow?
New students starting in 2009/2010 can apply for a few different types of funding.
The two main types of financial help you can apply for are a student loan for the full tuition fees of up to £3,225 and a maintenance loan of up to £4,950.
Most students will take out tuition fee and maintenance loans, which will be paid at the start of each term.
If you're from a lower-income household, you could also qualify for a maintenance grant or special support grant of up to £2,906. If you do receive this help - which doesn't have to be paid back - you won't be able to take out the full maintenance loan.
Are the loans means-tested?
All eligible students are entitled to a basic level of support.
Your eligibility doesn't depend on your family income but on factors such as your nationality or immigration status, and whether or not the course and institution qualify.
Most UK residents will qualify for a loan, no matter what their household income. You automatically qualify for 75% of the maximum amount but the remaining 25% is means tested, so not everyone will be able to borrow that.
How do I apply?
You can apply online for both the tuition fees and maintenance loans. If you're in England, go to the Student Finance England website; Welsh freshers can apply via the Student Finance Wales website; and in Scotland, you need to visit the Student Awards Agency for Scotland.
I'm Scottish, will I still pay fees?
Scottish students will usually pay no tuition fees for full-time courses at Scottish universities and can apply for a loan to meet the fees at English or Welsh universities.
Do I have to pay interest on my student loan?
Although these loans are much cheaper than a loan provided by a commercial entity like a bank, you do still pay a certain amount of interest on what you borrow.
This is set by the rate of inflation, to ensure what you repay is worth the same as what you borrowed.
When do I have to pay it back?
Unlike normal borrowing, student loans are repaid through the tax system. You only start repaying it once you're earning £15,000 a year or more.
Even then, the amount you repay depends on what you're earning, so if you walk straight into a highly paid dream job, you'll pay it off more quickly.
How do I pay it back?
Unless you're paying self-assessment tax, any student loan repayments will be taken from your pay before it reaches your account, just like with PAYE and National Insurance.
You'll be able to see how much you've repaid by checking your payslip. You should also be sent annual statements of your account - whether you're earning enough to make repayments or not.
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