5 Student loans – what can you get?
Student loans are offered to eligible students to cover the costs of education and living.
How do you apply?
The arrangements for student loans vary across the four constituent countries of the UK – England, Scotland, Wales and Northern Ireland. The scheme that applies to you is the one for the country you’re resident in – not the country where your university or college is based.
What loans can you get?
All the UK schemes offer two types of student loan:
- to cover the tuition fees charged by universities
- to cover ‘maintenance’ costs – living costs, including accommodation, while you’re studying.
For tuition fees, an annual maximum borrowing amount is set each year. Normally this is the amount of the highest fees charged by universities for undergraduate study. The maximum for part-time study is lower than for full-time.
Maintenance loans also have an annual maximum, although note that the maximum for a student living in the family home is lower than if they were living away. These loans are means tested by being linked to your parents’ income. The higher the income the lower the loan.
Residents in Scotland
If you’re resident in Scotland and you’re studying at a Scottish university, your university fees are paid by the Scottish government. Bursaries and loans are available to cover maintenance costs while studying. Instead of being paid once a term as in the rest of the UK this financial support is paid on a monthly basis. As in the rest of the UK, however, the amount of maintenance loan available to you is means tested on your parents' income. Higher education finance in Scotland is set up differently from the rest of the UK, and details of the arrangements can be found on the Student Awards Agency Scotland (SAAS) website [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] .
When do you get the loans?
Tuition fee loans and maintenance loans are usually paid in instalments at the start of each of the three university terms in an academic year. The size of instalments for tuition fee loans matches the way that tuition fees are charged. Normally the money advanced goes directly to the university or college. This means that the only funds to which a student will have access are the maintenance loans.
The fact that maintenance loans arrive as a lump sum at the start of each term (except in Scotland, as explained above) can present a major budgeting problem for students.
Activity 2 What’s the problem?
What do you think are the potential problems with the whole maintenance loan arriving in one go?
What can be done to avoid the potential consequences of not managing your money?
As you might have guessed, some students race through their maintenance loan. They go out and blow a big hole in their funds and the result is a disaster.
But there are more dangers than spending sprees like this: if you fail to spread your loan over the entire term and the next vacation, you will run out of money. Many students who spend freely in the first part of each term struggle to make ends meet in the later part or in the vacation. Wise budgeting means drawing on the loan in stages for each of the weeks it must cover – all of the term and all of the next vacation.
In the next section you’ll look at how student loan debt can build up, and at how and when it needs to be repaid.