Article by Fabafaterfifty
With the increase in student fees coming at a time when many midlife women are looking at their own financial future with more concern than they had anticipated, what do all the changes mean, and what help will your child be eligible for?
Families reviewing plans for their child’s university education
With record numbers of students applying to start university courses in September 2011 ahead of the increased tuition fees coming into effect in 2012, many families are having to review their plans for university education for their children.
The current system sets a cap of £3290 for tuition fees for English universities (free for Scottish students in Scotland, but new legislation will allow universities to charge up to £6,000 and in exceptional cases up to £9000 from September 2012. When living costs are also taken into account, students will leave university with debts on average of between £30,000 to £40,000, compared to current debts of between £20,000 to £30,000.
So, how is this impacting on families plans, especially in these uncertain economic times?
Many students planning to take a gap year are choosing not to do so, resulting in a record number of applications for university places commencing in 2011 , which will lead to a greater number being rejected. Others are looking at universities closer to home in order to save on living expenses, some are revisiting the courses they were planning to take and opting to take vocational courses likely to lead to more highly paid employment- others are questioning whether they should go at all.
So, for those students still choosing to go, how can university education be funded?
The current Student Fee system:
In England and Wales ,the maximum tuition fees charged are £3,290 for the 2010/11 academic year and for 2011/12 fees will be similar with only a rise equivalent to the rate of inflation.
Precise fees charged depend on the university or college attended, and the course.
(Scottish students studying at Scottish universities do not have to make a personal contribution towards their tuition fees)
Funding is available as follows:
A Maintenance Grant or Special Support Grant – worth up to £2,906
A Tuition Fee Loan to cover your fees in full (up to £3,290 for 2010/11). This is paid directly to the university or college. The amount does not depend on household income.
A Maintenance Loan – worth up to £4,950 if you live away from home, or more if you study in London (although the maximum you can get is reduced if you’re getting help through the Maintenance Grant)
A bursary from the university or college
All the above schemes are dependant on eligibility criteria, such as the course leading to a recognised certificate of higher education.
Repaying student loans
Student loans have to be paid back – but your child won’t have to start making repayments until they’ve left their course and are earning over £15,000.
Once earnings reach this threshold, the loan is paid back at a rate of nine per cent of whatever is earned over £15,000.
Fees, loans and grants From 2012:
New legislation will allow universities to charge up to £6,000 and in exceptional cases up to £9000 from September 2012
Welsh domiciled students will not have to pay extra fees as the cost in excess of 2010 levels will be met by the Welsh Assembly Government
All eligible students will be entitled to a government loan to cover their tuition fees, providing they are studying for at least 25% of their time.
A new £150m National Scholarships Programme is planned and will be targeted at bright potential students from poor backgrounds
Students from families with incomes of up to £25,000 will be entitled to a student maintenance grant of up to £3,250 and those from families with incomes up to £42,000 will be entitled to a partial grant.
Maintenance loans will be available to all eligible full time students irrespective of income.
No student will be expected to pay upfront for their tuition, and will not be expected to reimburse their fees until they are earning £21,000 (an increase from the current £15,000), with this figure rising in line with the cost of living from 2016. The repayment will be 9% of income above £21,000, and all outstanding repayments will be written off after 30 years. This means all graduates will pay less per month than they do under the current system.
Apart from the ‘Bank of Mum and Dad’ many banks are keen to tap into the student market offering interest free overdrafts to students. This may seem an attractive option, but most will revert to commercial interest rates once you cease to be a student.
Weighing up the cost of a university education versus the potential opportunities having a degree may offer now requires more thinking than ever before, especially for those students living in England, and those parents struggling to minimise the potential debt.