ARU Conference - Student Finance Blair Campbell Student Finance Information Team 06 March 2013.

ARU Conference - Student Finance

Blair Campbell

Student Finance Information Team

06 March 2013

Objectives

• A sound understanding of student finance for 2013 and beyond

• Good grasp of repayment

• Discussion common areas of uncertainty and difficult questions

.... Have fun?!

A Student Finance Story

There are 4 types of student finance. 1 product for fees, 2 for living costs, and 3 for disabled students or those with dependants. There are 2 types of support that come from universities and colleges.

About 3 in every 4 students takes out at least 1 loan. Of the 2 loans, 1 depends on income (the maintenance loan) and 1 doesn’t, the tuition fee loan.

The amount of support a student gets to live on depends on 3 or sometimes 4 things: (1) where they study, (2) what year of study they are in, and (3) how much they or their parents earn. For bursaries and scholarships, it might also depend on (4), what grades they get at A level.

Why is this important?

Top Google ‘Autocompletes’

Student Finance in 2013/14

Key Points for 2013/14

• Maintenance Grant up by to £3,354 max

• Tuition fee loan and maintenance loan remain the same

• Continued transition to Gov.uk

• First year of part-time online applications

www.practitioners.slc.co.uk

Scholarships & Bursaries

STUDENT FINANCE PACKAGE 13/14

Tuition Fee Loan

Maintenance (Living Cost) Support

Additional Support

The

Student Finance

Package


13/14 TUITION FEES & LOANS


• Up to £9,000 per year

• £6,750 part-time

• Maximum loan depends on fee charged

• Optional - take all, part or none of fee loan

• Average fee in 2012 was £8,657

TUITION FEE LOAN – FULL TIME


13/14 MAINTENANCE SUPPORT


• The majority of the maintenance loan will be available to all students. 65% of the total loan is Non Means Tested. (Not based on household income)

• The amount of maintenance loan available will be linked to where a student lives and studies while in higher education.

MAINTENANCE LOAN


Household Income £

Maintenance Grant

Maintenance Loan

Total

£25,000 & under

£3,354 £3,823 £7,177

£30,000 £2,416 £4,292 £6,708

£35,000 £1,478 £4,761 £6,239

£40,000 £540 £5,230 £5,770

£42,611 £50 £5,475 £5,525

£42,875 £0 £5,500 £5,500

£50,000 £0 £4,788 £4,788

£60,000 £0 £3,788 £3,788

£62,125 & over £0 £3,575 £3,575

Student living away from home, outside London 2013/14

COMBINED MAINTENANCE SUPPORT


13/14 ADDITIONAL SUPPORT


13/14

Disabled Students Allowances (DSAs)For students with disability, mental-health condition or specific

learningdifficulty. Not affected by household income, based on need.

Childcare Grant (CCG)Up to 85% of actual registered/approved childcare. Maximum of:

£148.75per week for one child, £255 per week for two or more children.

Parents’ Learning Allowance (PLA)Help with course-related costs for students with dependent children.Amount received will be between £50 and £1,508.

Adult Dependants’ Grant (ADG)For students with a partner or another adult who is financially

dependenton them (cannot be an adult child). Maximum grant is £2,642.

Additional Support


13/14 STUDENT LOAN REPAYMENT

12_1

3


13/14

• Nothing to pay until earning at least £21,000 (£1,750 pm) gross.

• Full time students repay from April after graduating from/leaving their HE course. (After 2016, if earning over £21,000)

• Part time students begin to repay April 4 years after they started their course. (If earning over £21,000)

• Repayments are 9% of income over £21,000, deducted automatically by HMRC.

STUDENT LOAN REPAYMENTS

12_1

3


13/14

• If income falls to £21,000 or below repayments will be suspended

• Remaining loan balance cleared 30 years after entering repayment process

• No penalties will be placed on early student repayments

• A student loan is very unlikely to affect your ability to get a mortgage

(The Council for Mortgage Lenders)

• Mortgage lenders are most interested in your spare monthly income (‘ability to repay’)

STUDENT LOAN REPAYMENTS


Income each year before tax

Income from which 9% will be deducted

Approximate Monthly

Repayment

£21,000 £0 £0

£25,000 £4,000 £30

£30,000 £9,000 £67

£35,000 £14,000 £105

£40,000 £19,000 £142

£45,000 £24,000 £180

£50,000 £29,000 £217

£60,000 £39,000 £292

STUDENT LOAN REPAYMENT – THE FIGURES

! Any outstanding loan balance will be cleared 30 years afterentering repayment.


There will be a variation in the interest rate attached to a students loan during study and when earning following graduation:

STUDENT LOAN REPAYMENT – INTEREST RATES

During study until

entering repayment

Interest rate is: Retail Price Index (RPI) +3%

Earnings:

Below £21,000Interest rate is: Set at RPI Only

Earnings Between:

£21,000 - £41,000RPI plus some amount between 0% and 3%

Earnings:

Above £41,000

Interest rate is: Retail Price Index (RPI) +3%


INTEREST RATES


Gross IncomeOld System

Monthly RepaymentNew System

Monthly Repayment

£16,000 £1 £0

£18,000 £16 £0

£21,000 £39 £0

£24,000 £61 £23

£27,000 £84 £45

£30,000 £106 £68

£33,000 £129 £90

£36,000 £151 £113

STUDENT LOAN REPAYMENT – COMPARISON

! Repayment for thresholds for existing students up from £15,000 to £15,795, and will rise again to £16,365 this April


Example 1 Old System Student

• 3 year course, £3,000 a year fees• £4,000 a year maintenance loan

• 25 year write off period

Owes £23,000 at end of studies, including interest

Starting Salary of £24,000

Total Repayments = £35,500

Repay full balance in 24.5 years


! Assumptions: 2% salary growth, 3% average inflation. Based on a report by HEPI on the Government White Paper, available here.

Example 2 New System Student

• 3 year course, £9,000 a year fees• £4,300 a year maintenance loan

• 30 year write off period

Owes £45,000 at end of studies,including interest

Starting Salary of £24,000

Total Repayments = £22,000

Balance written off after 30 years


Gross IncomeOld System

Monthly RepaymentNew System

Monthly Repayment

£16,000 £1 £0

£18,000 £16 £0

£21,000 £39 £0

£24,000 £61 £23

£27,000 £84 £45

£30,000 £106 £68

£33,000 £129 £90

£36,000 £151 £113


! This year will see the first earnings linked rise in repayment thresholds for existing students. Up from £15,000 to £15,795.


www.studentloanrepayment.co.uk

STUDENT LOAN REPAYMENT – DEDICATED WEBSITE


True or False?

True – loan is written off if you become

permanently unfit to work through illness

or injury

False – but you stop making repayments at any time you earn under the threshold

False – you are still eligible to make repayments if

working abroad and earning above the

threshold

False – there was a pilot

project (RTL) relating to this

between 2002 – 2004. It is

discontinued

True – or when aged 65 if taken out

before 1st September 2006

True – the debt dies with you, and no one

inherits it

False – becoming bankrupt does not

write off your student loan

False – but payments will stop

being collected, if unemployed/claiming jobseekers allowance

False – but repayments will stop if earnings dip

below the threshold if, say, working part-time

STUDENT LOAN WRITTEN OFF …

Websites and Further Info

www.gov.uk/studentfinance

www.sfengland.slc.co.uk

www.thestudentroom.co.uk/studentfinance

Key Messages for Students

Do not be put off by perceived increase in cost

Research student finance, along with other UCAS/Uni information – identify challenges

Apply online, on time. Deadline 31 May

The future

Fees may go up (but so what?)

Maintenance support may go up

Could the government change the policy for current borrowers?

Could new governments change the system altogether?

Another Student Finance Story

Over 3 in every 4 students takes out at a tuition fee loan. Less than 3 in every 4 take out living cost support. For those that do, loans make up less than ½ (or 1 over 2!) of their income.

For students who do not take out a loan, there are 3 main reasons: Nearly 2 in every 5 choose not to because of a dislike/concern about debt, and 1 in every 3 because of a concern about repayments. The rest felt they did not need the money.

There are 4 groups who are significantly less likely to take the loan: (1) students from professional families, (2) foundation degree students, (3) students living at home, and (4) NHS funded students.

2 groups of students are significantly more likely to take out a loan – those from a routine/manual work family background and those from lone parent familes.

Data from Parliament Briefing Paper 29 November 2012

Blair Campbell

[email protected]


ARU Conference - Student Finance Blair Campbell Student Finance Information Team 06 March 2013.

Documents

Transcript of ARU Conference - Student Finance Blair Campbell Student Finance Information Team 06 March 2013.