Taking on the student finance package sounds like a huge, daunting commitment. The student loan is made up of two parts - £9,250 tuition fees which goes straight to the university, and the living costs loan, which goes into your son or daughter’s bank account. The living costs loan varies on where your young person will be studying, and also on your household income. It’s currently:
£7,747 – Living at home
£9,023 – Living away
£12,010 – Living away in London
So the total student loan, for the tuition and living elements over three years would be approximately £54,000. It seems like a huge sum. But the key thing to remember is that it’s not really a loan. It’s more like a university tax. Your young person’s repayments are based on what they earn – not what they owe. It’s currently 9% of any earnings above £26,575 a year. So if your son or daughter earns £30,000 a year, they pay back just £25.69 per month. And the whole thing is wiped out after 30 years if they haven’t paid it off.
The amount your son or daughter gets will also depend on your household income. It seems unfair to me, but that’s the way it is. For a student living away from home but not in London, it starts at £9,023, and drops to £5,905 if your household income is more than £50,000 a year.
The average spend for a student’s living costs in 2019 was £7,227. So there may be a shortfall. It’s down to you as a parent to help out, or your young person may be able to get a job. Either way, it’s worth planning for that now, so it doesn’t come as a surprise.
So what’s it like to apply for student finance? I found it relatively straightforward. The application is done online. Your young person will need to do their bit, then you’ll need to set up an account on the government student finance website. Once you log in, the process guides you through all the information needed. Be sure to have your financial info to hand – payslips, etc so you can fill in the information needed. It’s the payslips from two years ago that you’ll need. But if Covid-19 has affected your income, you can ask for this year’s earnings to be used instead.
I found doing my part for the student loan application was OK. It worked well with no hiccups. A bigger headache is the finances for the accommodation. My son is in halls of residence for the first year, but he’s now looking for a house to share with his mates from university for year two. If you’re in this situation, a deposit may be needed, and you as a parent may be asked to be a guarantor. Make sure you read the contract thoroughly, and get some legal advice if you don’t understand it. Here’s one pitfall. Your young person’s contract for shared housing will probably have the words “Joint and severally responsible”. This means that each and every student is responsible for paying the rent – not just their share.
So if one student can’t or won’t pay, your son or daughter is legally responsible for making up the difference. The landlord could ask all, or just one of the occupants to make up the difference. If you have signed as a guarantor, then you take on this responsibility. If one or more of the students don’t pay their rent, or causes any damage – you could be held responsible for the debt – even if your child has already paid their fair share. If there are five student sharing a house, the total annual rent liability could be over £30,000! So please read the contract carefully and be wary – do some googling before you commit. Many Student Unions offer a contract checking service too. So take your time before signing. Your young person may feel under pressure to sign up quickly and get their accommodation sorted – but make sure you and they know what you're committing to.
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You can find more information about fees and financial support available to you here, whether you are full-time or part-time, undergraduate or postgraduate, home, international or an EU student. The processes are generally pretty straightforward, but take a few minutes to read through the paperwork, so you're clear on what to expect.