Guide to student finance

Thousands of A level students will finish their exams in the next few days and face an anxious wait to find out whether they have got the grades they need to start university later this year.

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Fewer school leavers than usual are expected to take gap years this year due to next September’s hike in tuition fees.

In December last year, MPs voted that fees for UK students on undergraduate courses would increase from £3,350 a year to as high as £9,000 where universities can show they have made extra provisions for bursaries for less well off students.

A significant number of universities have already confirmed that they plan to charge the maximum allowed, prompting many students to start university while fees are still lower. Bath Spa, Birmingham, Bristol and Leeds universities, for example, have all announced fees of up to £9,000 for students in 2012.

Anyone starting in 2011, however, will stay on the current system, so the changes will only affect new 2012 undergraduates.

If you are planning to start university this year, you need to make sure you claim the financial help you are entitled to – we explain all you need to know….

What financial help is available?

All UK students starting university in September this year are entitled to a Tuition Fees loan of up to £3,375 from the Government. This is not means tested but has to be repaid after the course ends.

If you are from a low income family, you may be eligible for a Maintenance Grant to help with living costs which doesn't need to be repaid. The maximum grant available for 2011/2012 is £2,906, available to full-time higher education students with a household income of £25,000 or under. You'll get at least a partial grant if your household income is £50,020 or under.

There is also the Maintenance Loan, which is repayable at the end of your course and is worth up to £4,950 if you live away from home and are starting university this September, or £6,928 if you are living away from home in London. You will get £3,838 if you are living in your family home while you are a student. Part of this loan is means tested, so the total amount you'll get will depend on your family income. If you are getting help through the Maintenance Grant, the maximum you can get from the Maintenance Loan is reduced.

For more information on all this financial help, visit the website www.direct.gov.uk/StudentFinance.

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Haven’t I missed the deadline to apply?

New students should have applied for their loans and grants by 31 May, while returning students have until 30 June. If you have missed this deadline, however, you can still apply for finance, but your payments won’t be guaranteed to start at the beginning of term. That means you may be without money for a few weeks when you start student life.

When do I have to repay the money I’ve borrowed?

Currently, you don’t have to start repaying your student loans until you are earning at least £15,000 a year.

Your student loan repayments will be 9% of anything you earn over this threshold. Remember that this isn't the same as 9% of your total income - you only make repayments on what you earn above the threshold. The interest rate is set at the rate of inflation as measured by the Retail Prices Index (RPI).

From 2012, when fees increase, you won’t have to pay your tuition fee loan and your living cost loan back until you are earning over £21,000 a year.

Again, you will repay your loans back at a rate of 9% of your income over £21,000. So if your salary is £25,000 a year, you’ll pay 9% of £4,000, which is £6.92 a week.

There are changes to the amount of interest you will pay if you start university next year. For full-time students, interest will be charged at the rate of inflation, as measured by the RPI plus three per cent from the date you take out your loan until the April after graduation.

After that, if you earn under £21,000, interest will be charged at RPI, and if you earn between £21,000 and £41,000 the interest rate increases depending on the amount you earn from RPI to RPI plus 3%. So the more you earn, the higher the rate of interest. If you earn £41,000 or more after studying, you will automatically be charged RPI inflation plus 3%.

How can I boost my student income?

Many students work part-time while they study to help cover living costs, or will get a summer job before their course starts in the autumn. If you do plan to work over the next few months, make sure you don’t pay more tax than you need to.

For example, if you work and pay tax during the year, but earn less than your personal allowance, which is £7,475 for the 2011-2012 tax year, then you could be eligible for a tax refund.

You can complete a P50 to claim a tax repayment if this is the case. You will need to send it to your tax office with your P45, which you should have been given by your employer when you finish your job. HMRC will send you any tax refund you're entitled to by post. They'll also send you a new form P45.

The time limit for making a repayment claim is four years from the end of the tax year. So, for example, you must make a claim for repayment of tax paid in the tax year that ended on 5 April 2011 by 5 April 2015.

You may also have overpaid tax if your employer puts you on an 'emergency' tax code when you started work. This usually happens when they don't know enough about your income or tax details for the full tax year.

If you think you've paid too much tax because you've been taxed on an emergency code you should again claim a refund by contacting HMRC.

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