The Aspire Guide - Flipbook - Page 19
Household income is defined as annual household income (your parents’ or partner’s income plus your
own). Other factors can also contribute to your household income, such as if you have siblings under
the age of 18 who live with your parents, if you are a carer or if you have a disability. The shortfall is the
difference between the maximum loan available from Student Finance England and how much you will
receive, depending upon your household income.
This shortfall can be made up in various ways, including getting a job alongside your studies or during your
holidays, applying for a bursary or getting financial support from your parents. Many students end up using
a combination of these methods to pay for their living costs at university, so make sure you think about how
you might fund your studies in advance.
If you are a care experienced or estranged student, Student Finance will not ask for your parents’ income
details. Instead, you can apply as an ‘independent student’ by submitting evidence to confirm your status.
Once Student Finance receives and approves your evidence, you will receive the maximum amount of
Maintenance Loan available to you and may be eligible for extra support (such as a bursary and yearround accommodation). For further information, check out your Student Finance agency. There are also
other charities that offer advice to students that are care experienced (such as Propel) or estranged (such
as Stand Alone).
How do I pay it back?
Of course, student loans are not just free money - you
will be expected to pay some of it back. However, don’t
let this put you off - it’s simpler to think of student loans
as a graduate tax as opposed to a typical loan. You are
only expected to begin paying it off if you’re earning over
£27,295 a year. You repay 9% of your earnings over that
threshold until your loan and interest is paid off.
If you earn over
£28,000 per year,
you’ll only pay
back £60 over
the year which is
£5.00 each month
- the same price
as about two
cups of coffee
=
£7.50
Student Loans are generally thought of as a graduate tax
because of just how low-risk they are. This is because,
unlike most other loans, they are “guaranteed” by the
government: for most loans (like mortgages) you’re locked into a fixed repayment schedule. This means
you must pay off a certain amount of the loan on a regularly agreed timeline, even if your financial situation
changes. With student loans, repayments are only made while you earn above the earnings threshold. If
your income ever goes below this threshold, you will not have to make repayments, and if your income
is never above the threshold, you will never have to make repayments. This is because the government
has agreed (or “guaranteed”) that after 40 years, if you have been unable to pay back any amount of the
loan, they will repay what is left. For some high earners, student loans can be paid back in under ten years.
However, for the average graduate, you will never pay back your full student loan.
Am I charged interest?
In England, interest is added to the loan each year. While you’re studying, the interest rate is equal to the
rate of inflation (RPI) plus 3%. After you finish studying, the interest rate is between the rate of inflation
and the rate of inflation plus 3%, depending on what you earn. For more details, please visit: www.gov.uk/
repaying-your-student-loan for the latest information.
Not taking out a student loan?
Even if you do not intend to take out a maintenance loan, it is still useful to get your household income
assessed by student finance. This is because you will receive an entitlement summary, which can be used
to prove your eligibility for means-tested bursaries at your university and for careers support programmes
like upReach.
Some students who follow certain faiths may be deterred from taking out a student loan due to this interest
payment system. As mentioned, it’s really important you still receive an income assessment. This will allow
you to access alternative sources of financial support, such as the options on the next page. You can also
reach out to the universities you have applied to or the Student Funding Office for more guidance.
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