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Wednesday, 14 August, 2002, 16:01 GMT 17:01 UK
The lowdown on student loans
Higher education in England and Wales can be an expensive business, with students having to pay tuition fees as well as living costs. This BBC Working Lunch factsheet guides you through the business of borrowing money to go to college or university.
(There are different arrangements in Scotland and Northern Ireland. Further details from the Student Awards Agency for Scotland and, in Northern Ireland, your local Library and Education Board.)
Who's eligible for a loan?
Full-time students aged up to 54. They can get a loan even if they have previously studied in higher education. But students aged 50-54 will have to show that they plan to work after their course.
However, there are some groups who are not eligible for loans:
How much is available?
These are the maximum loans for 2002/2003. (Loans are smaller in the final year as they do not need to cover the long vacation - these figures are in brackets):
Eligible students can borrow up to 75% of the maximum amount before means-testing comes into effect. How much of the remaining 25% a student is entitled to will depend on their family's income. The Local Education Authority (LEA) will look at your income and your family's income to decide how much money you'll need to find yourself.
By deducting certain sums from your parents' gross income, the LEA will come up with a figure called a residual income.
Complicated, isn't it? How about tuition fees?
The most any student will be asked to contribute towards their fees in 2002/03 will be £1,100. The actual amount will depend on that old favourite, the family's residual income:
Students in Scotland do not have to pay tuition fees.
How do I apply?
Ask your LEA for an Eligibility Application Form (HE1 - (click here for an online form). The LEA will let you know what you are eligible for and you then need a Financial Assessment Form (HE2 - click here for an online form) to go through the means-testing process.
Returning students should automatically be sent a new Financial Assessment Form (HE2) by their LEA.
The final deadline for applications is four months after the start of the academic year. Students who do not apply to be assessed for eligibility by then will not be eligible for support for the rest of that year. But they can apply during any subsequent year of their course.
How do I pay the loan back?
You start repayments the April after you graduate or otherwise leave your course. The amount depends on your level of income. Repayments are deducted from wages in a similar way to National Insurance, at the rate of 9% on everything earned above £10,000 gross - if you earn less than that, repayments are suspended until this threshold is reached.
What's the interest rate?
The amount owed is adjusted in line with inflation (calculated using RPI, the Retail Price Index). The interest rate for the year starting September 2002 is 1.3%.
The DfES have published a guide to student loans, which contains detailed information on all aspects of the support available to students in higher education. It is called "Financial support for higher education students - a guide for 2002/03" and can be obtained through your LEA, from the DfES Information line on 0800 731 9133 or from the Student Support website.
Can I defer repayments?
If your income falls below £10,000 gross a year, your repayments will be stopped automatically.
If you have a mortgage-style loan - that's if you started higher education before 1 September 1998 - you can apply to defer your loan for a year at a time if your gross income is less than 85% of national average earnings.
You qualify if your gross income each month is £1,752 or less. You can also pay off your loan more quickly if you want.
What other financial help is available?
There is additional help available for students with children and for disabled students. Information on these can be found in guides published by the DfES: "Childcare Grant and other financial help for student parents in higher education in 2002/03" and "Bridging the gap: a guide to disabled students' allowances (DSAs) in higher education in 2002/03".
Both of these guides can be obtained through your LEA, from the DfES Information line on 0800 731 9133 or from the Student Support website.
If you cannot get any of the loans mentioned already, you might be able to apply for a Career Development Loan (CDL)
This is a deferred repayment bank loan offered in partnership between DfES and four major banks. It is designed to cover vocational training and education lasting up to two years, plus, if relevant, up to one year's practical work experience where it forms part of the course. Study can be full-time, part-time or distance learning. A CDL cannot be used to finance anything that is being funded by another source.
Who can apply?
Anyone aged 18 or over who lives or intends to train in Great Britain. If you are claiming state benefits, or wish to do so while you are studying, you should talk to the office that pays you before you apply for a CDL.
How much can I borrow?
You can apply to borrow between £300 - £8,000 to cover up to 80% of course fees (or 100% of the course fees if you have been out of work for three months plus prior to applying).
The full cost of books, materials and other related expenses including travel can be included and, if the course is full time, living expenses. If you are claiming 100% of the course fees you must get your application form endorsed by your local IAG provider, the National Council for Education and Training for Wales (ELWa) or Local Enterprise Company (LEC).
When do I repay the loan?
You make no repayments during the period of learning supported by the loan and for up to one month afterwards. The DfES pays the interest on the loan during this period and then you repay it to the bank in accordance with your loan agreement. It is possible to postpone the start of repayments by up to 17 months if, when you are due to start repaying:
Students have to agree any postponement with the bank before repayments are due to start.
Part-time students can now apply for loans. If you are studying for at least 50% of an equivalent full-time course, you can apply for a loan of £500. To qualify, you must:
Call the DfES on 0800 731 9133 for an application pack.
Your university or college can provide financial help if you are finding it difficult to meet living expenses or course costs. This help is discretionary and is based on individual circumstances. Admissions tutors or the student welfare section of the university or college will have more information and details about how to apply.
Access bursaries are for full-time student parents (and those studying part-time to be teachers) who might need extra help because they have children to look after. They are paid according to need. Students can apply before they start their course.
Students who are in financial difficulty during their course can also apply for hardship funds or loans. For information on hardship funds and bursaries in Wales, call the Further and Higher Education Division of the National Assembly for Wales on 029 2082 6318.
Social security benefits are also available to certain students, such as lone parents and disabled people. If you are receiving benefits and would like to know how becoming a student will affect them, ask at your local Benefits Agency office.
Housing Benefit and Council Tax Benefit can also be awarded to certain groups of students, including lone parents, disabled people, student couples with children and part-time students. Contact your local authority for more details.
How can I find out more?
Click here for other links offering help to students.
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