Since 2012 student finance has changed considerably for UK students. Tuition fees have risen to £9,000 a year and in some institutions they’re even as high as £9,250. To make matters more concerning, there is constant media coverage on whether the UK Government will re-cap course fees at an absurdly high £12,000 a year.
Furthermore, since these initial changes to tuition fees, grants have disappeared, and students are primarily supported by their maintenance loans, parental support, and their own ability to generate an income whilst studying. It’s important to be aware of these changes, complicated as they may seem, as new students need to be equipped if their options were to change again. In order to help your children in the best way possible, here are some things parents need to know about student finance.
The Difference Between Student Finance England and The Student Loans Company
Student Finance England (SFE) deal with the allocation of loans and your application. The Student Loans Company (SLC) deal with the repayments when you graduate. It’s important to remember these differences as it can get confusing!
When to apply for funding
Whereas the UCAS deadline is the 15th of January each year, the dates Student Finance England (SFE) recommend to apply by change yearly, and are dependant on when your child's course begins.
If the student’s course starts between 1 August and 31 December 2018, the government advice is to apply for funding by 31 May 2018. Furthermore if the course begins between 1 January and 31 March 2019, the advice is to apply by 30 September 2018. There are full details available on this on the www.gov.uk website.
- There is not a deadline as such for applying for funding.Instead there are recommended dates which you and your child should apply before in order to receive funding before they are due to start at university.
- A student can apply for funding up to 9 months after the beginning of their first academic year. If funding is not immediately necessary there is always an option to start an application at a later stage.
It is important to be aware of the specific “apply by” dates on the government website as this is essential to ensuring that that your child's funding is secured before they begin their degree. The date for courses beginning in September is usually around the end of May, but it is wise to be prepared as applications beyond the given date can encounter administrative delays to the allocation and release of funding.
The application process
It is also important to understand the process of the application and avoid some common issues that cause delays. We've put together some tips to show you how you and your child can keep delays to a minimum during this process:
- Make sure your child has a valid passport. An out of date passport can make applying for student finance more difficult and long winded.
- As a parent you will be required to send personal and financial information to support your child's application. If you are to send evidence to Student Finance England send it via recorded special delivery to avoid any excess time wasted in postal delays.
- Take note of your child’s unique customer reference number somewhere you will always have it. Further down the line it will make contacting SFE much more straightforward and uncomplicated.
- Each year your child will be required to sign a declaration when submitting their application. This is to confirm that their evidence and information is accurate and representative. You can aid your child by checking they have completed the declaration form. This form is key to ensuring that funding is allocated to them. These forms are different for Scotland, Wales and Northern Ireland, so it is important that you ensure they are signing the correct one, all of which can be found on www.gov.uk.
- And finally, make sure your child is aware that they must confirm their attendance at university upon arrival. There is no need to pester them about this, as the university will prompt them to properly register within their first few weeks, though it may be helpful for them to know why. They may not get their student loans on time otherwise!
The key takeaways:
- Checking that you and your child have filled in the application accurately.
- That you have provided the required evidence on time.
- Ensuring your child has sent the required declaration to SFE.
- Making sure your child knows to register once at university.
Being aware of these points and understanding their implications will help to avoid delays in the application process. It will also ensure that they receive their instalments by the time their academic year is due to start.
Changes in circumstance
Whilst your child is away at university, it is worth being aware of your of how your own change of circumstances can affect your child's funding. If you find your income changes significantly, you must be prepared to declare your changes in a Current Year Assessment Form. This will make sure your child's funding is allocated in accordance to your circumstances, and they even may be eligible for more or less maintenance loan support. The SFE website states that if a parent's income in the tax year is likely to be at least 15% lower than in the tax year two years previously, they can assess the household income on what the estimated income will be.
How can parents help with student finance?
Moving away from the initial SFE application process, how would a parent financially support their child whilst at university? Is it wise to pay their loan for them? How are loans repaid and when do repayments come into effect?Paying tuition fees upfront on behalf of the child isn't necessarily more financially beneficial. Being clued up on the intricacies and details of your child’s loan, and more importantly the repayments, could help your child avoid some potential pitfalls.
We've detailed some advice on financial support, loan repayments, how interest is accrued and calculated, and if taking a student loan will impact your child's financial future:
- Ensuring you and your child know that all student loans expire after 30 years will help you make informed decisions on how you can best support them. Some students may never pay their full loan back. It could be more beneficial to pay for tuition fees via funding from SFE. Parents could be better off supporting their children by making contributions to their accommodation, supplies and expensive textbooks (if they are not already provided by the university’s library services).
- Repayments depend on which plan your child is on, and which part of the UK you live, students will fall under Plan 1 or Plan 2.As detailed on the SLC website, Plan 1 is applicable for any English or Welsh students who began their course on or before1 September 2012 and for Scottish and Northern Irish students. By contrast, Plan 2 affects English or Welsh student who started an undergraduate course after 1 September 2012. Knowing which plan is applicable to your child will help them navigate the repayment process when they graduate.
- Be clued in on the repayment thresholds and aim to understanding more about the loan and how repayments work. The loan repayments are frequently altered and amended and were last changed on the 8th April 2018, with full details being displayed on the Student Loans Company (SLC) website.
For any graduates on Plan 2, the new repayment threshold for student loans will be £25,000 a year, £2,083 a month or £480 a week (correct as of May 2018 from the SLC advice). The loan now only begins to be deducted at salaries of £25,000+, where as previously this was fixed at £21,000.
For Scottish and Northern Ireland students on Plan 1, student loans will begin deducting on or £18,330 a year, £1,527 a month or £352 a week. Although this may allow graduate students time to adjust to adult life and become financially independent before paying off their student debt, it is important to be aware that changes can occur in relation to loans.
- Be aware and up to speed on how interest rates can affect loans over time. Make sure your child keeps their student finance agency informed of their current salary after graduating. This ensures that they are issued the correct amount of interest overtime. Interest rates are more complex for Plan 2 students and there are a number of options available. SLC advise to check the website as rates can change for both plans each academic year. More information can be found: https://www.slc.co.uk/students-and-customers/loan-repayment/interest-rate-and-threshold-changes/interest-rates.aspx
- Finally, student loans do not affect credit ratings, and are very unlikely to impact on an individual's ability to gain a mortgage.
The key takeaways:
- Remember that loans will expire after 30 years
- Loan repayment thresholds can be amended, so make sure you stay updated on the SLC’s latest online information.
- Know that SFE deal with the processing of the application, and SLC take care of the loan repayments after your child has graduated.
- Know that loans do not affect credit ratings.
Being aware of the more complex financial implications in regard to repayments and interest rates is a beneficial way of assisting your child through university.
If you knew these points already, this is great news. If you didn’t, we hope you can see how ensuring you and your child are well informed on the processes, expectations, and deadlines of Student Finance England and the Student Loans Company, is vital to securing student funding each academic year. Student Finance in the UK can appear confusing to parents, especially when there is the potential for more changes to tuition fees, maintenance loans, and threshold repayments. Using these points we have raised, you can become educated and aware of how SFE and SLC work and how you can help you child use their services effectively.
Student Loans Company https://www.slc.co.uk
Student Finance England https://www.gov.uk/student-finance-register-login