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Bill Rammel - Minister of State for Lifelong Learning, Further and Higher Education, Talks About Student Finance in 2006

With university offers to think about and exams to prepare for, this is a busy time for those considering higher education. And with the launch of a new financial support package for students, it is likely that they are also starting to think more about money.

That’s why over the next few months I’m keen to ensure that every prospective student and their parents understand what financial help is available and urge them to take advantage of the support and finalise their funding applications.

I am particularly keen that those students from lower income families understand the amount of non – repayable support on offer as I am determined to stop financial concerns becoming a barrier for the very people the system has been designed to help.

The old system of collecting university fees had flaws, not least making students and their families pay up-front, which we know proved difficult for some families. We have therefore designed a new system which makes paying for university fairer and more manageable, and gives most help to students from the poorest backgrounds. My job is to make sure this message is completely understood.

Under the new financial support package, those from households with an income of £37,425 or less can apply for non-repayable grants of up to £2,700 a year and some students will also have access to further financial support from universities and colleges in the form of non-repayable bursaries. This means that students paying the full £3,000 tuition fee and in receipt of the full maintenance grant of £2,700 would receive a minimum bursary of £300, with some universities offering as much as £1,000 per year.

The critical point I would like to raise is that a significant number of young people can benefit from this support, with around 50% of students expected to be eligible for a full or partial grant and this could amount to over £8,000 in non-repayable support for a three year course.

We have also reviewed the repayment system and under the new arrangements students will not have to repay loans until they’re earning over £15,000 p/a, at which point they will pay back 9% of their salary above this threshold. So someone earning the average starting salary for a graduate level job of £18,000 p/a will pay back just £5.19 per week, significantly less than at present.

Repayments are also linked to how much is earned, not the amount owed. And unlike commercial loans, the only interest charged is at the rate of inflation meaning the amount repaid is, in real terms, the same as the amount borrowed. It’s the best loan offer you’ll ever get.

The new system is designed to ensure that higher education is more accessible for all, regardless of family income or background. The new student support package and the way the loans have been structured will reduce the burden of student debt to as manageable as possible.

I want a broader proportion of people to be able to enjoy the benefits that going to university brings and as the first person in my family to go to university, I know that doing so transformed my life chances. We also know more young people need higher education qualifications, recent research revealed 50% of jobs by 2012 will require graduate level skills.

I came from a working class background but my Mum always told me I should move into higher education. Essentially, she planted the idea in my head. She passed her 11 plus but her parents could not afford for her to go to Grammar school further away. This prompted her to always want me to do better.

I attended Burnt Mill comprehensive in Harlow and achieved nine 'O' Levels and 'A' Levels in French and German. I then chose to read French and The University of Cardiff because of an inspirational languages teacher, Neville Morgan who had studied French at Cardiff himself. I went to university believing it would give me better chances and better jobs. I think it worked!

For many people, going to university is a life-changing experience, and the best route to a secure future. I’ll be doing everything during this critical period to communicate the facts to make sure the details of the new student financial support package and in particular details on the non-repayable grants are accessible and easy to understand. I urge students and parents to investigate their eligibility and apply now in order to avoid delays in payment.

Students can also apply for loans to cover tuition fees and living costs - these are not like commercial loans, but are linked directly to the rate of inflation - and students don't repay any loans until they're in work and earning more than £15,000.

Non-repayable Maintenance Grant - Student Fact Sheet

The facts below are designed to give you a greater understanding of the non-repayable financial assistance now available so read below to find out what extra help might be available to your students.

What are non-repayable grants?
o    From September 2006 higher education students, from lower income households, could be eligible for a non-repayable maintenance grant of up to £2,700.
o    This is free source of financial support supplied by the government.

Who will qualify?
Full-time Students:
o    It is expected that around half of all full-time students are likely to be eligible for a full or partial grant.
o    Those whose parents have an income of £17,500 or less will qualify for an annual maintenance grant of £2,700.
o    Partial grants are available for those students with a household income of between £17,501 and £37,425.
Part-Time Students:
o    Part-time students, studying more than 50% of a full-time course can also apply for financial help.  For instance, those studying 75% or more of a full-time course, may be eligible for non-repayable support of up to £1,125 in the form of the fee grant. 
o    Eligible part-time students can also apply for a course grant of up to £250. 
o    Additional support is also available to eligible students in the form of the Access to learning Fund.

How much can they get?
o    Non-repayable maintenance grants of up to £2,700 per year are available to students from lower income households.  This can equate to more than £8000 over the duration of a typical 3 year degree.
o    How much a student will receive will depend on their income and that of their household.
o    Students will therefore be means tested on the basis of family income.
How to apply?
o    Students are able to apply for the new maintenance grant support once course applications forms have been submitted.
o    Students only need to fill out one application form to cover the non-repayable maintenance grant, the tuition fee loan and the maintenance loan.
o    Paper applications opened in March 06; online applications opened in April 06.
o    The form (Form PN1) is available from local authorities or they can apply online through www.direct.gov.uk/studentfinance

When to apply?
o    New students applying for means tested support need to apply before 30 June 2006 to ensure that monies are cleared in time for the start of the first term of their course.
o    Application forms for the part-time fee and course grants will be available from August 2006.
o    A new application will need to be made each year.

How is it paid?
o    Non-repayable maintenance grants will be paid in three instalments, one at the start of each term. Payments are made directly into the student's bank account.

Where to get more information
o    Please visit - www.direct.gov.uk/studentfinance.

Additional financial support:
Student Loan for Fees:
o    From September 2006, universities and colleges offering higher education courses in England will be allowed to charge up to £3,000 per year to all new students. Students can apply for the new Student Loan for Fees to cover the cost of these fees.
Student Loan for Maintenance:
o    Student loans to help with living costs are also available.
Repaying the Loans
o    The loans are totalled and students then repay the fee and maintenance loans once they have left university, are in employment and are earning over £15,000 per year. Repayments are linked to how much students earn not how much they owe. So someone earning £18,000 would pay back 9% on earnings over £15,000.  That equates to £5.19 per week.

The table below shows the maximum maintenance loans available:

Bursaries:
o    Universities and colleges charging more than £2,700 a year for a course are required to provide additional non-repayable financial support, such as bursaries, to students who are receiving the full £2,700 maintenance grant. The students that receive the full maintenance grant, and are being charged the maximum fee of £3,000 a year, will receive at least £300 a year in additional financial support from their university or college in the form of a bursary. The amount of financial help will depend on the university or college. Some are offering much more so students should speak to the university or college that they wish to attend. Some universities and colleges are also offering bursaries to all students, so it's worth investigating as they may benefit.

EXAMPLE: Full-time Students: the help they'll get each year if they are studying outside London and living away from home.

*Where maximum fee of £3000 is charged by university or college and loan of £3000 is taken.
**Universities and colleges are offering a wide range of bursaries to a broad range of students.  Students need to check what is available.