As the exam season draws to an agonising close, thoughts of next semester may or may not already be buzzing around in your head – in particular, something along the lines of, ‘how am I supposed to make ends meet?’ Unfortunately, the best way in order to answer this question is to pick up the phone and begin next year’s long and arduous journey with the Student Loans Company (SLC).
The SLC is an official offshoot of the government, and therefore does not offer the sort of loans that your father always warned you about. The SLC offers regular, index-linked loans with a saintly interest rate of 1.5% APR to anyone and everyone who is studying towards a degree at university. Best of all, these loans do not need to be repaid until after you’ve received your degree and are earning a salary above a certain threshold – the current threshold is set at £15,796, although this amount may be increased due to inflation until 2016 (which means if you’re graduating closer to 2015, you will not have to repay your loans until you’re earning closer to £17,000).
Once you’ve finally left university and are earning ‘the big bucks,’ repayments of 9% will begin to come straight out of your employer’s payroll – similar to income tax – until the loan is repaid in its entirety. This means that you won’t have to fill out any paperwork or bother setting up any pesky direct debits, and your repayment plan should be insignificant enough that it won’t impact your financial future in the long run.
The SLC sponsors two types of loans that students typically must pursue: the Tuition Fees Loan and the Maintenance Loan.
The Tuition Fees Loan is exactly what it sounds like; amidst last year’s legislation allowing institutions to raise their yearly tuition up to £3,375, the SLC is now offering all students a loan covering this amount in full. Once you have applied for the Tuition Fees Loan, this will typically be paid straight to your institution, which means zero hassle for you – as well as zero chance of spending the loan on anything else. Side note: if you’re a Scottish student studying in Scotland, this loan is not applicable to you, as the Scottish government is kind enough to pay your yearly tuition in its entirety.
On the other hand, the second type of loan offered by the SLC is indeed applicable to everyone: the Maintenance Loan. This loan accounts for the living costs of student-life away from mum and dad, and is available to any full-time student. It should be noted that everyone who applies for the Maintenance Loan will receive a small monthly payment without fail; however, the process of arranging a loan that will actually put a dent in your spending habits can, unfortunately, be a bit of a headache.
The bulk of your Maintenance Loan is based upon the yearly income of either you or your family. This means that the amount in which the SLC will allow you to borrow will be means-tested, and depends solely upon your parents’ residual income (ie how much they made last year before taxes). In order to prove this, your parents will need to provide the SLC with a P60 or the like, and must provide official reports regarding any pensions or welfare benefits currently on the table. Yet once the goose-chase of finding and posting forms to faceless strangers is over, good news may come rolling in; if your parents made under £50,020 last year – or £20,000 in Scotland –you are eligible for the maximum available loan.
Pieces of advice are rarely free, so here’s one on the house: always apply for the maximum loan available, full stop. You may not think that you need the full loan now, however you will not be able to come crying to the SLC if you run into financial trouble halfway through the semester. Furthermore, if you take those extra payments that you haven’t been using and place them into a savings account that gains interest over time, you could actually make money off of your student loan.
So, if you haven’t gotten in touch with the Student Loans Company yet, do yourself a favour and start the application process the second that you’ve finished reading this sentence. The volumes of applications that the company must process before next semester are already stacking up; that is to say, if you don’t hurry, don’t expect to receive your first loan in time for Freshers Week. Nobody wants to get up to their eyeballs in debt – and although dealing with the SLC can be a complete nightmare at times, they do indeed offer the only truly reasonable student loans available on the market.