Student Loans – everything you need to know
Here we look at student loans and everything you need to know before committing to one. Now you have the grades, you’ve chosen the university and it’s time to lock down the finances. It might not be the most exciting topic but choosing the right student loan, and understanding it, is important. And, what really counts is that no student is wrongly put off going to university thinking they can’t afford it.
What is a student loan?
When you embark on your degree you will have two main costs – your tuition fees, and your living costs. In order to cover the cost of these, you can apply for a loan or grant to help. However, there is a lot of confusion regarding student loans, and repayment is often the largest concern. But, sadly most of this worry is misplaced. The price tag of university is kind of irrelevant. What matters in practical terms, is how much you have to repay. Furthermore, what you repay depends on what you earn after university. To put it in layman’s terms, it’s kind of a ‘no win, no fee’ education. Those who earn a lot after graduating or leaving university will repay a lot. Those who don’t gain too much financially from going to university will repay little or nothing.
What are the different types of loans available?
Government loans
Universities in England can charge up to £9,000 per year for full-time undergraduate courses. And English students can apply for a loan for the full amount. The easiest way to apply for this type of loan is online. You can register by applying using the form provided with evidence of your household income and any other necessary documents. Then, sign and return the online declaration form that will be posted to you. There are more detailed guides are available, UCAS has a particularly useful page with advice and relevant links.
Private Loans
There is another option aside from a Government loan and that’s a private one. You can consider borrowing privately to finance your degree. We don’t mean payday loans (the sky-high interest rate will quickly cripple you). There are specialist finance offers and loans for any amount between £2,000 and £40,000, offering you more freedom and a lower interest rate after you graduate. Of course, they will be subject to terms and conditions and an underwriting assessment.
How are repayments calculated?
It’s often (wrongly) thought that all students will leave university around £50,000 in debt, but don’t let this figure scare you. However, you don’t need to start repaying your loans until you’re earning over £21,000, and at a fixed rate of 9%. So, the amount depends solely on how much you earn. If your wage drops or you lose your job, the repayments will adjust accordingly.
We hope this has helped dispel any myths surrounding student loans and provided you with everything you need to know.
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