ARU Conference - Student Finance
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Transcript of ARU Conference - Student Finance
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
www.practitioners.slc.co.uk
13/14 TUITION FEES & LOANS
www.practitioners.slc.co.uk
• 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
www.practitioners.slc.co.uk
13/14 MAINTENANCE SUPPORT
www.practitioners.slc.co.uk
• 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
www.practitioners.slc.co.uk
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
www.practitioners.slc.co.uk
13/14 ADDITIONAL SUPPORT
www.practitioners.slc.co.uk
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
www.practitioners.slc.co.uk
13/14 STUDENT LOAN REPAYMENT
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www.practitioners.slc.co.uk
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
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www.practitioners.slc.co.uk
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
www.practitioners.slc.co.uk
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.
www.practitioners.slc.co.uk
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%
www.practitioners.slc.co.uk
INTEREST RATES
www.practitioners.slc.co.uk
INTEREST RATES
www.practitioners.slc.co.uk
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
www.practitioners.slc.co.uk
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
STUDENT LOAN REPAYMENT – COMPARISON
! 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
www.practitioners.slc.co.uk
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
! This year will see the first earnings linked rise in repayment thresholds for existing students. Up from £15,000 to £15,795.
www.practitioners.slc.co.uk
www.studentloanrepayment.co.uk
STUDENT LOAN REPAYMENT – DEDICATED WEBSITE
www.practitioners.slc.co.uk
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
www.practitioners.slc.co.uk
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