Money Speak

Student Finance - the Myths V Reality

For many young people, all the talk about student finance in the press has made them think that going off to university or college is simply not an option.

But money is an issue that shouldn’t put anyone off going into higher education - there is the financial support in place to help young people achieve their dreams!

For more information check out:

www.aimhigher.info

What do the changes to how university places are funded from 2006 mean?

No more upfront tuition fees

Universities will be able to charge variable tuition fees, but these will only have to be paid back when students have graduated and started earning – taking the pressure off many parents and students to find thousands of pounds while they are studying

Lower loan repayments

Currently graduates start paying back their loan when they’re earning £10,000. Raising this to £15,000 means that repayments will be reduced when graduates are finding their feet after university! For example, if a graduate starts earning £20,000 (which is around the average graduate starting salary), then they will only have to pay back £8.65 a week - over 50% less than current repayments and less than the cost of a CD

Increased grants

Students can benefit from grants of up to £2,700 each year to help them with the cost of living – depending on what their parents or guardians earn.

Bursaries

Universities and colleges who wish to charge £3,000 a year for a course will provide bursaries of  £300 a year to students who receive the full £2,700 maintenance grant. Some universities and colleges may even be offering more – so it is important to check out what each university is offering!

The Myths v Reality

Myth: Students will be worse off while they are studying at university or college

Reality: Full-time students will be better off because they and their families will not have to find the money to pay tuition fees upfront – and many will even benefit from the much larger maintenance grants

Myth: Graduates will struggle to pay back their loans

Reality: Student loans are a world away from the commercial loans that banks offer. This is because:

 - Repayments are linked to the size of your income, not the size of your debt – so repayments are calculated by what you earn, not what you owe

 - The loan is really flexible – for example, you can stop repayments if you are taking time out of work to have a GAP year or start a family

 - The only interest charged is based on inflation, meaning that in real terms you only pay back the money you borrow

 - Anyone still paying back their loan 25 years after graduation will have their outstanding debt paid for them

Myth: Young people won’t be able to go to university if their parent’s can’t afford to support them

Reality: From 2006, young people will only have to start paying their tuition fees once they are earning over £15,000. This, added to the fact that grants of up to £2,700 a year will be available to help students cover their cost of living, will mean that there is much less pressure on parents to financially support their child through university