personal finance

Fees and funding: ‘Think of your loan as a graduate tax’


Biology student Molly Savage struggled to imagine how she’d ever afford university – she knew her parents were too cash-strapped to help. But she’s managed to win £5,000 a year as part of a scholarship scheme targeting students from disadvantaged backgrounds.

“I was over the moon,” she says. “It’s made a massive difference – I knew I could go to uni without any financial worries. There are so many expenses that crop up, but I haven’t had to ask my parents for any extra money this year.”

Savage, now at the end of her second year, is one of 50 students each year on the University of Bath’s Gold Scholars Programme, which has been running since 2017. But her experience isn’t the norm – every year nearly 2 million people apply for repayable student loans.

Although an official review published in May proposed capping tuition fees at £7,500 [pdf] (rather than £9,250), extending the loan payback period by 10 years and bringing back maintenance grants, the existing terms still apply for this year.

“Currently it’s the poorest and most disadvantaged students who end up with the greatest debt,” says Reggie Blennerhassett, pro vice-chancellor and finance director at the University of Roehampton. About a half of Roehampton students come from disadvantaged backgrounds and, like many universities, it too offers scholarships, bursaries and ad hoc help from a hardship fund. “Sometimes £200 can be enough to help them out of difficulty,” he says.

For both maintenance and tuition fee loans, university applicants need to apply to the official Student Loans Company – ideally in spring, as soon as they’ve applied to university. Loan applications are now linked to tax details (HMRC), which makes the process smoother for applicants. But just 60% of students say they fully understand the terms and rates of their loan [pdf], according to research from savethestudent.com.

Fortunately, students who’ve not secured their loan can still start their course – they can apply up to nine months after it begins – but this will slow down maintenance payments.

Tuition fees are paid directly to the university rather than the individual student. But maintenance loans are paid into a student’s account in instalments over the year. These can reach a maximum of £11,672 a year for students living away from home in London and starting in September, and up to £8,944 for those living away outside the capital, but they’re means tested – if household earnings are £50,000 or more, this falls to around £8,409 and £5,735 respectively.

More than half (55%) of parents supplement their child’s income by £200 a month, according to research (of 100 parents) by the Scholarship Hub, while one in five donate £400 a month; 21% of grandparents also contribute.

But students might be missing out on more than £150m in bursaries and scholarships every year, says Karen Kennard, who founded the online database the Scholarship Hub to help students locate extra cash. Nearly a third of these are given out by universities for academic merit, 22% for financial need, and 21% for students with caring responsibilities, for instance, while 9% cover sporting achievement – Roehampton now provides up to 15 awards of £1,500 a year for e-sports gamers, who are expected take part in gaming contests.

Many London universities – including King’s College, Imperial, Queen Mary and UCL – provide healthy scholarships; outside the capital, Nottingham, UEA and Stirling are generous, but there are many more. And professional organisations also offer funds, although these require more effort in the application stage.

Student loans accrue interest from the start, at a current rate of just over 6%, but students don’t have to pay anything back until they’ve graduated and are earning more than £25,000 a year, when they’ll pay 9% on any earnings above this threshold – on a salary of £33,000, monthly repayments would reach £54.

Currently, outstanding loans are cancelled after 30 years, and some 83% of all loans are never repaid in full (according to the Institute for Fiscal Studies); they also don’t affect individual credit ratings. “To all intents and purposes, it’s a graduate tax,” says Blennerhassett. “The most important thing is that students come, they stay and they succeed.”

Experience: ‘I’ll take a nine-hour coach rather than the train’

Khobhi Kromel-Agamah Williams, 20, is studying history and politics at Northumbria University in Newcastle

I’ve not got an overdraft and I don’t have a credit card – I’m not comfortable with that. I try to put some money aside, so it’s there if I ever want to treat myself or do anything spontaneous. This spring I’ve been pretty tight for money.

I didn’t set a budget in advance but I started assessing my spending at university and I’ve learned so much. I never realised how much I’d spend on food. I get peckish all the time but I try not to buy snacks when I’m out, as that’s so expensive.

I’ll spend about £20 to £30 at Morrisons every week and I can cook a bit, although I’m no masterchef. There are lots of handy videos on YouTube, and cooking can be creative and fun. I’ve started preparing my meals for the week in advance. You can spend a fortune on takeaways if you’re not careful.

Going out can be a massive expense. It depends on your personality – you have to be cautious and work out whether it’s worth it. I try to go out once a month, or when I’ve finished an assignment. Peer pressure plays a part but there are many times I’ve decided I don’t want to spend the money.

Laundry is the big unexpected expense that creeps up on you – I’m envious of those students who take their washing home. London, where my family live, is 250 miles away so it’s not an option, but I do manage to go back sometimes – I’ll take a nine-hour coach rather than the train, as it’s so much cheaper.

University accommodation has its downsides; you don’t get much personal space, and not everyone will be your friend, but you can be civil. Next year I’m moving into a studio flat, which will be more expensive but I’m confident I’ll manage.

When you go to university you don’t want to ask your parents for money – you want to feel independent and you don’t want to be a burden. But at the end of the day they care for you, so if you’re struggling, just ask them. Mine weren’t in a position to help with rent but they are supportive.



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