What are student loans?
Someone who has a degree will have a better chance when it comes to securing a job. Doing a degree is a both a great way to follow a dream or passion of yours as well as making yourself a viable candidate for a future job. Something that scares most people is the thought of paying for a degree, as the costs of university is constantly rising.
Join the ranks of millions of people going to university and apply for a student loan. This is where you can borrow sums of money for your education and pay it back, with interest, over time. Ideally you would attempt to look for grants or scholarships as you won’t have to pay the money back, but loans can be reasonable and easy to manage.
How much can I borrow?
This will be broken down into three sections, tuition fee loans, maintenance loan, and grants, scholarships and bursaries.
Tuition Fee Loan
Students in England will pay a maximum of £9,250 per year in tuition fees, but don’t worry as you won’t need to pay the fees upfront. This is where the tuition fee loan comes into play, you can apply for one of these and you’ll only start to pay it back once you’re at a job that’s earning you more than £21,000 a year.
This is the chunk of money that will cover the cost of housing and living costs such as buying food. Like tuition loans you only pay it back once you’re earning more than £21,000 per year. The amount of loan you receive will depend on your household income, what your parents earn. To put it simply, the less they earn, the more you get and vice versa.
Grants, Scholarships and Bursaries
If you’re lucky enough and display quality academic or physical ability, you could be offered a scholarship, which is essentially a free ride where everything is paid for. Or you could get a bursary which is just basically extra support that you don’t have to pay back. However, grants, which were sums of money that you didn’t have to pay back, no longer exist and have been replaced by maintenance loans which require repayment.
Are they considered good or bad?
Student loans are designed to fund an education. Despite going to university costing a lot of money, there is no doubt that a degree opens many doors to employment and career opportunities. That being said, the idea of carrying a massive student loan debt with you after you graduate can be very daunting and overwhelming.
If you find yourself in a tough financial situation, you may be able to get rid of all of your various debts that could include; mortgage, auto loan, or credit card. Student loans on the other hand won’t go away that easily, you have to pay it back as there’s no other option. Another thing to bear in mind is that if were to fail your degree and not graduate, the student loan debt will still need repaying.
A good tip to remember is simply don’t borrow more than you plan to earn in your starting salary. If you’re planning on being a teacher when you graduate, who earns at least £22,467 a year, according to TargetCareers.co.uk, then borrowing £60,000 for multiple years of university wouldn’t be the best financial choice.
How do I repay them?
As mentioned before you only start paying your student loan back once you’re earning more than £21,000 a year. If you begin earning more than that you will pay back 9% of whatever you earn that goes over £21,000, so if you’re on £28,000, £7,000 over £21,000, you’ll repay £630. The money will be taken straight out of your pay and you can check how much you’re paying on your pay slip.
It comes straight out of your pay so you don’t need to worry about not being able to repay. However, if you lie about your student debt to your employer you could be forced to pay the full sum, so just tell them the truth and don’t try to cheat the system.
As mentioned multiple times, it all depends on how much you’re earning, so focus on your studies, work hard and push the idea of paying back your student loan debt to the back of your mind.