A child going to university is a stressful time for any parent. From making sure they’ve packed the right things to helping them sort out their accommodation, it’s difficult to stay on top of everything. On top of this, you’ll naturally worry about their finances – and yours.
University can be expensive. It’s important to know exactly what your options are for funding, and to make sure you know how much it’s going to cost. Our guide to fees, grants and budgets has all the information you’ll need on loans and how they’re repaid, as well as scholarships and bursaries.
Student loans aren’t far from the newspaper headlines nowadays, and with good reason. Many students are leaving university with up to an eye-watering £50,000 of debt. However, it isn’t a simple system. There are two different types of loans, and the amount your child will get of each depends on a number of factors, such as which country you’re from and your household income.
Many students are leaving university with up to an eye-watering £50,000 of debt.
The majority of students take out both types of loans. However, you don’t have to take either, if you’d prefer to pay for either the tuition fees or your child’s living expenses out of your own pocket.
Tuition fee loans
Tuition fee loans are likely to be the largest part of your child’s student debt. The tuition fee loan covers the tuition fees that are set by the universities. They don’t vary much, so don’t feel like you need to encourage your child to shop around. Also, a slightly lower total debt may not mean your child pays back any less. Their annual repayments are set based on their salary, and many students will not repay their total debt before it’s written off.
Tuition fees are currently limited to £9,250 per year. In practice, the vast majority of UK universities charge the maximum they are able to, so there isn’t usually any difference in the tuition fees. Although, there are often big differences in the bursaries or scholarships available – read our section on this below for more.
TThe tuition fees that your child will have to pay also vary depending on the country that you live in. The fees for international students (meaning those coming from outside the UK) are significantly different. There is also variation between the different countries in the UK.
- English students: Tuition fees are up to £9,250 per year if you’re studying in England, Scotland, Northern Ireland or Wales.
- Scottish students: Scottish students can study for free at Scottish universities. Fees for England and Northern Ireland can be up to £9,250, and in Wales up to £9,000.
- Welsh students: Fees up to £9,000 in Wales, or £9,250 in England, Scotland and Northern Ireland. All Welsh students will receive a non-repayable fee grant for £4,800, as well as being able to apply for loans.
- Northern Irish students: Tuition fees up to £4,160 per year if you study in Northern ireland, or £9,250 per year in England or Scotland, and £9,000 in Wales.
Maintenance loans are the second chunk of student loan that your child will usually take out. It’s intended to cover the other costs of university like accommodation and food, as well as course costs like printing or books.
It’s rare nowadays that maintenance loans will cover all the money that your child needs to live at university. Many students to have to supplement this with extra money. This could either be through a part time or summer job, from savings, or, in the majority of cases, students are supported by their parents.
The amount of maintenance loan that your child will receive is based on your household income. The maximum amount of maintenance loan if your child is living away from home is £8,700. For students living away from home in London, the maximum amount is £11,354. If your child is going to remain living at home, the maximum maintenance loan is £7,324.
In the majority of cases, your child will not receive the maximum amount of maintenance loan. The household incoming threshold is £25,000 per year. If your household earns more than this, your child will only be eligible to receive a lower amount of maintenance loan.
While the loans might sound like a large amount of money, it’s important to bear in mind that the repayment terms are based on your child’s future income. Also, the loans are written off after 30 years. This means that it’s unlikely your child will end up paying back the full amount, and they’ll never be forced to pay back more than they can afford.
The repayment thresholds vary by country, but in England and Wales your child will only make repayments if they earn over £25,000 per year. In Scotland and Northern Ireland the threshold is £18,330.
Repayments are currently set at 9% per year of the money earned above the thresholds. This is paid directly to the Student Loans Company by their employer, unless they’re self-employed, in which case they’ll have to calculate their repayments as part of their tax returns.
These loans do accrue interest. While your child is studying and until April the year after your child finished their course: 3% + the Retail Price Index. After this, the interest rate varies depending on your child’s income, from a sliding scale of which rises up to 3% + RPI.
Many universities offer a range of other financial support options. These are often targeted at those with lower incomes or from other underrepresented groups. However, there are a number of bursaries and scholarships that are available to all applicants to those universities. Some of these may be based on academic ability, so even if your child receives an unconditional offer, it can still pay to get top grades!
It’s important to make sure you know which options are available to your child. The range of bursaries and scholarships that are available can vary hugely between different universities, so it’s worth investigating before your child even makes their choices. These bursaries or scholarships can make a huge difference to the affordability of university – and you don’t want to miss out if your child is eligible.
Will I need to submit proof of income?
You don’t have to submit proof of income to receive tuition fee or maintenance loans. However, if you want your child to receive an accurate amount of maintenance loan based on your household income, you’ll need to submit proof of that income.
What if I’m divorced?
If your child is applying for an income based loan like the maintenance grant, this will be based on the income of the household that they normally live with. The parent who the child doesn’t normally live with won’t have to give any details, and their income won’t be counted.
Will this affect my child’s financial future?
While taking on student loans are a big financial decision, it’s important to remember that student loans aren’t classed in the same way as other kinds of debt. They don’t appear on credit files, and while mortgage lenders may take them into account when choosing the amount of mortgage to give (as your child may be making repayments, therefore affecting their income), they shouldn’t affect whether or not your child is able to get a mortgage in the future.
Is it worth repaying a student loan early?
It’s tempting to think repaying a student loan with a large chunk of money, like an inheritance, would make good financial sense. In some cases this may be true, particularly if your child has already paid off a large percentage of their total loan, but most of the time it isn’t worth it. Student loans are written off in 30 years, meaning many students won’t repay the total amount. Because of this, paying it all off early can end up actually costing you money.
There’s a lot of information to take into consideration when you’re planning how to help your child financially for university. However, if you plan ahead early and make sure you’ve got all the right information, you know you’ll be able to set and manage accurate budgets.
If your child is thinking about their university options, MyUniChoices can help. It costs just £15 and offers an easy way to make sure your child carries out the right research. Its interest-based matching highlights course areas that are well suited to your child and can challenge them on courses that aren’t well suited.