Before starting university, there are a number of things you need to prepare for – one priority being sorting out your student loan. It might seem like a long and complicated process, but the sooner you get it done the better.
To help get you started, we’ve put together a short guide on student loan applications for first-time undergraduate students.
What is a student loan?
A student loan is a series of payments made to a university student. It is split into two segments:
- a Tuition Fee Loan – covering the cost of the degree, paid directly to the university, and
- a Maintenance Loan – paid to students to help with living costs during their studies.
Both loans need to be repaid. Student Finance England (SFE) handles student loans in the UK and your application will need to be made through them.
How does a student loan work?
Your Maintenance Loan will be paid to your bank account at the start of each term. The total amount you will be paid is determined by several factors, such as:
- your total household income,
- whether you will be living at home
- if you’re living inside/outside of London.
For every year you study, you’ll need to apply for a Maintenance Loan. This means that the amounts you’re eligible for may vary each year. You can find out how much you are able to claim up to, by visiting GOV.uk.
How to apply for a student loan
To start your application, visit GOV.uk and create an online account. Make sure you apply in plenty of time as it can sometimes take up to six weeks for your application to be processed. If you’re applying for a full Maintenance Loan, you’ll need to provide your household income for tax year 2019-20 (for 2021 entry).
From 2020, a full-time undergraduate student can claim a Tuition Fee Loan of up to £9,250, although some courses cost less than this. You’ll need to submit one application to cover the entirety of your degree.
How to pay back your student loan
It’s important to know that interest will start to build on your loans from the day it’s taken out. Repayments will be automatically deducted monthly from your salary when you earn over the minimum threshold of £27, 975. You will only repay 9% of the amount you earn over the threshold.
For example, if you earn £30,000 annually, you will repay 9% of £2,705 – not 9% of £30,000.
If you become self-employed, HM Revenue and Customs (HMRC) will work out how much you will repay, based on the information you submit in your tax return. You’ll also have the choice to make extra repayments yourself, via your online account.
What do your parents need to know about student loans?
To determine your Maintenance Loan amount, your entire household income will need to be submitted. Your parents or guardian will be contacted individually to complete a form that lists their annual incomes and other aspects such as their tax code.
Additional evidence may be required such as wage slips. This is because the household income will affect how much Maintenance Loan the student is eligible for. The higher the household income is, the lower the Maintenance Loan will be as it is expected for your parents/guardians to help support you financially.
This form will need to be completed for every year for the duration of your degree, as part of your Maintenance Loan application. It’s important to notify SFE if you think your household income will be at least 15% lower than the tax year before.
Finally, if your parents need to call SFE for any reason, you’ll need to be present. For security purposes, SFE won’t discuss anything with your parents or guardians without your permission.
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