The UK's higher education system is about to see a big change in its fee structure. From September 2012 universities can charge up to £9,000 a year for tuition. As well as borrowing to cover fees, most students will also take out maintenance loans. If you work out what you will need annually and multiply this by the years you'll spend at college, you'll know how much you'll borrow, but this sum will be less than you'll repay.
What are the key points you need to know about loans and repayment and where can you get an idea of how much you'll really pay back after you graduate?
Student Loan Repayment: How Does it Work?
Students are allowed to take out a certain amount in loans each year to cover both fees and maintenance costs. Although where you live in the country may affect how much you can or need to borrow and how this is repaid, systems share some common elements.
So, for example, you don't have to pay back any borrowing whilst you are studying and have to hit a certain income threshold before payments will be taken. This usually happens the April after you graduate, depending on your salary. Interest will be added during your college years and may then be set at variable levels – usually at the retail price index (RPI) or the RPI plus percentage points. Again, this may depend on how much you are earning.
Although you can go into uni with a fair idea of how much you will borrow, the variables involved in repayment make it hard to know exactly how much you will pay back and how long it will take you. To get a clearer idea, you may find a student finance calculator useful.
Using the BBC UK Student Finance Calculator
In September 2011 the BBC launched an online student finance calculation tool to help English and Welsh students better understand how the new fees system will affect them later in life. The analysis is based on:
- Your age and gender.
- The length of the course you want to take and when you'll go to university.
- Your estimated annual loan.
- The type of job you think you'll end up doing, or a national average estimate.
Based on data provided by ONS (The Office for National Statistics) the calculator takes the information you enter and produces a graph that shows you when you are likely to start making repayments, how much you may pay back in total and how long it may take you.
Bear in mind that this only gives an approximate snapshot, based on averages and likely factors. You can also download a student finance spreadsheet from the BBC site. This allows you to change the assumptions used within the tool. This could give you a more accurate prediction if you have a clearer idea of your circumstances or can input specific data of your own.
Key Student Loan Facts: Location Matters
It's also worth remembering that where you currently live can also affect tuition fees and how much you can/will need to borrow overall. If you live in England, for example, then the maximum you can be charged by a UK college from 2012 is £9,000 a year. But, students in Scotland pay no tuition fees if they study at a Scottish uni and students in Northern Ireland are given a fee cap if they choose a college within their country.
The government in Wales handles things a little differently by giving a grant to Welsh students to defray some tuition costs, no matter where they study in the UK, and to EU nationals who attend a uni in Wales. Given the increase in fee charges, students all over the country may now be paying more attention to where they study on a cost basis and the application process may now involve comparing tuition fees as well as preferred courses.
Sources:
- UCAS: The cost of studying in the UK for 2012 entry
- BBC.co.uk
Carol Finch - Carol Finch is the Topic Editor for Retirement Planning, Budgeting, E-Commerce & Technical/Business Writing on Suite101.
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