Parents of Students - tell me about loans

[Dimplenose]

DS is now in the final throws of choosing his university for next year. We thought we'd be able to support him but had underestimated how much it all costs!

He'll need to get a loan, for his fees at the very least, that we plan to pay off for him within a couple of years of him graduating but I cannot find any info on the interest charged on these loans. I've heard rumours of it being interest free and also of it being charged at the rate of inflation. (The info on the government website is obscure to say the least!)

So has anyone got any practical info on repaying their child's loan?

 

[snookhams]

I too would be interested in this - DS is only in y12 at the moment but he is already looking at uni's - he is also considering going abroad in particular US - can you get loans to help here as well!!! hopefully he might get a swimming scholarship which would help greatly

 

[CustardTart]

Both of my children obtained student loans and are repaying them themselves directly thro' their pre-tax salary. They had a short period of grace and then started paying off the debt as they earned over the £15k limit - the interest payable is usually the rate of inflation. You can pay it off more quickly but it's hardly worth it...

In real terms, my daughter pays a monthly amount that is slightly less than her NI contributions and has repaid about 30% of the loan after 18 months tho' she was on a 4 year course so has more to repay. Sophie's a big fan as she liked having a little financial independence from us. Plus it meant she could concentrate on her studies in the final two years of her degree and cut back on her part-time job hours. In her view, it's really not worth not taking the loan as it's obviously cheaper than piling debt on credit cards and it's paid off pre-tax in a way you hardly notice. Actually, I shall be taking out one myself now I've remembered about it...

 

[wishspirit]

Hi I am a current Uni student. You can take out 2 kinds of loans- Tuition Fee and Maintance. Your tuition fee can be for the maximum of (currently) £3225 . HOWEVER they are currently thinking about taking the cap off, which means they could go up to £7000!!!
Maintance loan is to support you while you are there, and is totally dependant on what you earn. Terrible system as it assumes your parents will help you out. The numbers are: Studying in London (which i think is unfair, I am paying the same amount in rent as many other people in London, but not living there) and away from home: Max of £6,643. Studying elsewhere and living away: Max £4745. Living at home: Max £3,673.

Make sure you budget this loan with him!! Even the best students can go off the rails with money by not having a budget.

You can also get grants and burseries from both the government and the university dependant on means, and if they are the first person to go to uni in your family.
The student finance website says the current rate of interest on the loan is 2%. However the great thing about the government loan is that it is automatically paid back out of your pay check, when you start earning over £15,000 a year, which means you don't even really see it go. Its the student overdrafts you have to be wary about.

I would really suggest going to www.directgov.org/studentfinance as it breaks it down really well. All I have said depends on him being English and going to an English university, not anywhere else in Britain, as things start to change.

 

[tennisfan]

I assume its still the case that the maintenance loan is paid is 3 installments at the beginning of each new term. That was the case when I was at uni.

The only annoying thing regarding the interest is that they only review it twice a year, I think March & September. This means people who already have the loan have to wait till March to get a lower interest rate. I think the ruling is that the rate will never be more then 2% of the Bank of England base rate.

 

[Lizzybear]

IMO it's a good idea to take the maintenance loan whether it's needed or not.. If you don't need it stick the money in an ISA or similar and gain some interest then just pay the initial loan back (obviously the person doing this would have to quite disciplined financially!) If the loan is needed or will be in the near future then the interest rate is much lower than pretty much any private provider could offer so it's really worth taking advantage of whichever way you look at it. Me and my bf both took out maintenance loans and he earns enough to have the payments taken out every month but as Karen said it's hardly noticeable

 

[jen_uk]

I took out loans and now I pay it back directly from my wages, I earn approx 25K and they take about £50 a month so its hardly noticeable. One thing I will say though is that it is perfectly possible to work and do a degree at the same time, when I did mine I was only in classes for between 9-14 hours a week! I had a part time job which covered all of my living expenses and I can honestly say it didn't affect my studying or student life at all.

 

[Dimplenose]

I was in a very lucky position when I was a student with no fees and a full grant and I've always wanted to give DS and DD the opportunity to get a degree without getting into debt of any sort.

DS knows that we can only just afford to do this and is saving up from his current part time job to give him some extra money while he is away, and is also planning to find some part time work when he is at university.

We went to an open day yesterday and I was stunned at the hall of residence fees - and for the legth of contacts (I'm sure I only paid during term time) which also bump the cost up. We'd expected him to get a little in the way of a non repayable grant but the parental earnings threshold has been dropped by nearly £10,000 and now only just prevents him from claiming.

How much do students spend on food etc., as as I far as I can see the maintainence loan would barely cover the hall fees?

 

[Clare D]

I work at a University in the bursary team and we are advising students for the 09/10 academic year to start applying as soon as possible to the student loan company. As yet I don't think you can do it but the online applications will open shortly through the SLC.
As well as the SLC loans the university may offer some assistance financially depending on whether or not a full undergraduate course is being applied for. If an HND then some assistance may still be possible. They tend to look at postcodes, whether or not they have come from a school/college that the uni has a relationship with and household income. These bursaries are not repayable and will be paid each year to the student (as long as circumstances haven't changed) and normally paid in installments.

 

[wishspirit]

How much do students spend on food etc., as as I far as I can see the maintainence loan would barely cover the hall fees?

Mine only just covered my hall fees in my first year (circumstances have changed since then), used a mixture of money I made in the holidays,my student overdraft, my savings and being careful with my money to see me through. Its hard though!

Where's your son thinking of going? Some places are more expensive than others.

 

[Dimplenose]

!

Where's your son thinking of going? Some places are more expensive than others.

He's very keen on Coventry. It seems O.K. to me, I'm just a bit worried that their entry requirements are a lot lower than his predicted grades. I thought he'd choose it as his insurance choice.

 

[CustardTart]

...One thing I will say though is that it is perfectly possible to work and do a degree at the same time, when I did mine I was only in classes for between 9-14 hours a week! I had a part time job which covered all of my living expenses and I can honestly say it didn't affect my studying or student life at all.

I think it depends on the course, Jen. My DD could just about work part-time in the first couple of years tho' she had loads of language classes. Her year in Paris was very intense and almost full-time plus the dissertation in her final year took care of weekends. She was able to temp during the hols and save some cash... My DS did Fine Art and Animation and really didn't have time for regular part-time work from the start. He managed to do some modelling which gave him chunks of cash from time to time...

All I know is it was VERY expensive have 2 kids at Uni at the same time and we were really, really shocked...

BTW I do about those hours you mention but spend double that on preparation and study - tho' that's probably because I'm old...

 

[tennisfan]

IMO it's a good idea to take the maintenance loan whether it's needed or not.. If you don't need it stick the money in an ISA or similar and gain some interest then just pay the initial loan back (obviously the person doing this would have to quite disciplined financially!) If the loan is needed or will be in the near future then the interest rate is much lower than pretty much any private provider could offer so it's really worth taking advantage of whichever way you look at it. Me and my bf both took out maintenance loans and he earns enough to have the payments taken out every month but as Karen said it's hardly noticeable

In theory this is a good idea, however ISA interest rates are extremly poor. My one was 6% in April (one of the best on offer) it was 3.5% last week. So there isn't much difference so the interest earned would be next to nothing.

I was fortunate to be able to work paqrt time throughout my degree. Supermarkets are the most flexible when it comes to hours.

 

[Lizzybear]

In theory this is a good idea, however ISA interest rates are extremly poor. My one was 6% in April (one of the best on offer) it was 3.5% last week. So there isn't much difference so the interest earned would be next to nothing.

I was fortunate to be able to work paqrt time throughout my degree. Supermarkets are the most flexible when it comes to hours.

I haven't looked into it in much depth (an ISA was just the first one that came to mind!) as I actually had to use mine for living expenses but MSE has a good page about student loans and the best accounts to invest in but this bit in particular relates to taking it even if you don't necessarily need it:
http://www.moneysavingexpert.com/health/student-loans#maximum
I agree though it's a shame from a saving point of view that the interest rate has been lowered.

 

[wishspirit]

I was fortunate to be able to work paqrt time throughout my degree. Supermarkets are the most flexible when it comes to hours.

Have you tried to get a job in a supermarket recently?? That's the worrying thing, jobs are very thin on the ground, some students are really struggling.

I don't have a term time job, I just work my butt off in a job over the holidays.

 

[MaddieB]

We went to an open day yesterday and I was stunned at the hall of residence fees - and for the legth of contacts (I'm sure I only paid during term time) which also bump the cost up. We'd expected him to get a little in the way of a non repayable grant but the parental earnings threshold has been dropped by nearly £10,000 and now only just prevents him from claiming.

How much do students spend on food etc., as as I far as I can see the maintainence loan would barely cover the hall fees?

Residence fees vary a lot between and within universities. At my uni we can choose between different priced halls from around £60 to £110 a week including bills. Some residences are term-time only lets and others included the christmas and easter hols.

I usually spend about £15-20 a week on food but its very easy to spend a lot more each week if you eat out (especially if you buy lunch on campus). Other costs to consider are textbooks (I spend about £200-300 a year on these) and about £30-40 a week on other stuff. Hope this helps.

 

[Frances999]

One thing I will say though is that it is perfectly possible to work and do a degree at the same time, when I did mine I was only in classes for between 9-14 hours a week!

That isn't necessarily true. University is about independent study and reading as well as the set classes, lectures and tutorials - some people take much longer working and digesting the material sufficiently - everyone has different working patterns and not everyone can deal with the pressure of a full time degree coupled with a part-time job. In addition, having a part-time job is positively disallowed at certain top universities (Oxford, Cambridge, LSE(?) to name but a few). IMHO use of the student loan, maintenance grant (if applicable), and parental support should see students through without the need for employment during term-time. Extra money via part-time employment can easily be made in the holidays.

 

[wishspirit]

I usually spend about £15-20 a week on food but its very easy to spend a lot more each week if you eat out (especially if you buy lunch on campus). Other costs to consider are textbooks (I spend about £200-300 a year on these) and about £30-40 a week on other stuff. Hope this helps.

Your budget is a lot different from mine! With rising food prices I am lucky if my weekly shop is less than £30, that is including fruit and veg though!
I don't spend nearly as much on textbooks. In fact I think it has been £30 whole year thus far, but my uni is big on having everything online, so I spend on printing! I am good at keeping my incidentals low, but now I am in second year and off campus you need to take into account higher rent (yes higher in my area) and travelling costs. A night out or two can really set you back if you aren't keeping an eye on your spending!

 

[tennisfan]

Have you tried to get a job in a supermarket recently?? That's the worrying thing, jobs are very thin on the ground, some students are really struggling.

I don't have a term time job, I just work my butt off in a job over the holidays.

I have just left my supermarket job last week after 9 years. We were nearly always recruiting for different departments. I'm leaving for a new job which doesn't require a degree so I feel like I have wasted 3 years at the moment.

 

[tennisfan]

That isn't necessarily true. University is about independent study and reading as well as the set classes, lectures and tutorials - some people take much longer working and digesting the material sufficiently - everyone has different working patterns and not everyone can deal with the pressure of a full time degree coupled with a part-time job. In addition, having a part-time job is positively disallowed at certain top universities (Oxford, Cambridge, LSE(?) to name but a few). IMHO use of the student loan, maintenance grant (if applicable), and parental support should see students through without the need for employment during term-time. Extra money via part-time employment can easily be made in the holidays.

Regarding this the rule of thumb usually set by unis is to sepnd the same amount of time studing out of lectures as you do in. So if you only have 9 hours of lectures another 9 over a week can easily mean getting a job for a few hours a week. I jbow not all degrees are like this. I managed it when I was at uni & I had a lot of work to do outside of contact time at uni, especially for my final year due to the nature of my degree.