Student Loans Mythbusting
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Updated October 2017
Ignore newspaper headlines about students leaving university with Ј50,000 of debt. That’s a mostly meaningless figure. What counts is how much you’ll repay; for some that’s far more, for others it’s free.
This guide is written to bust common myths about student loans, grants and finance, including the 20+ key facts every potential student, parent and grandparent should know.
20+ student loans mythbusting tips, including.
Recently graduated and worried about the interest?
Read Martin’s “Student loan interest’s rising to 6.1% – should you panic or pay it off?” guide
Before we start, I’d just like to say:
For 23 years we educated our youth into debt when they go to university, but never about debt.
It was for this reason, and while no fan of them, when massive changes were announced to student finance for those starting in 2012 or beyond – including the trebling of tuition fees – I agreed to head up a student finance taskforce. The idea was to work with the National Union of Students, universities and colleges to ensure we busted the myths and misunderstandings that resulted from so much political spittle-flying.
Don’t confuse the cost and the price tag
With headlines shouting about Ј50,000 student debt and that getting bigger as living loans increase in 2017, it’s safe to say many students and parents are scared by this huge sum – and worry about how they’ll ever repay it.
But in essence that fear is misplaced. That’s because the price tag of university is mostly irrelevant. What matters in practical terms is how much you have to repay – and that’s a completely separate number from the total amount of tuition fees, maintenance loan and interest, because it all depends on what you would pay.
What you repay solely depends on what you earn after university. In effect this is, financially at least, a ‘no win, no fee’ education. Those who earn a lot after graduating or leaving university will repay a lot. Those who don’t gain too much financially from going to university will repay little or nothing.
This guide applies to the system started in England Wales in 2012
If you started before that you’re on a different system; please see the Should I repay my student loan? guide for full info on past loan systems.
You don’t need the cash to pay for university
It ISN’T a case of ‘pay up or you can’t go’. Once your application has been processed, tuition fees are automatically paid by the Student Loans Company. And there is a loan for living costs too.
Of course you don’t have to take these loans, you could pay the tuition fees directly. Yet as you’ll see (in point 15) that’s often a bad idea.
However, some students won’t get the same support as the majority.
If you already have a higher education qualification
If you already have a higher education qualification you’re unlikely to be able to borrow the money. Included within undergraduate courses are Higher National Diploma/Certificate courses and certain teacher training courses such as the PGCE.
If you’re wanting to study health care or medicine?
The Chancellor announced an overhaul to the existing grants system for student nurses in his Autumn Statement in November 2015.
From academic year 2017/18, student nurses will no longer receive grants and will instead apply for student loans, which the Government says means they’ll get more to live on than they’d get through the grants system.
The amount students will get depends on whether they live inside or outside London and whether they are living at home.
Taking into account a long-course allowance, the maximum a student would get living outside London and not at home is Ј10,092.
Nurses who have already started their studies will continue to get grants and nursing students who’d already applied for grants for the 2016/17 academic year would also have received these.
When nurses leave their studies and start to repay their loans, it will be under the normal loan repayment system described in this guide, meaning they will repay 9% of everything they earn above Ј21,000. The starting salary for a nurse is Ј21,600, so in the first year they will pay about Ј54 towards their student loan.
How the system currently works
Medical and health care students get support from the NHS bursary scheme, where they’ll also get an additional NHS grant and maintenance loan from Student Finance England. The amounts and rules are different depending on the course.
Undergraduate medical or dental students on five/six-year courses will have all tuition fees paid in their fifth and final years. Those on four-year courses must contribute Ј3,465 to their first-year fees, then receive Ј3,465 in years two, three and four as a bursary. Both will then be able to apply for a student loan for the remainder of their fees (eg, undergrad med student can apply for a loan for one to four years).
Graduates on the four-year accelerated medicine programme will have to fund the Ј3,465 tuition fee for all the years themselves. Eligible students can apply for a loan up to Ј5,535 to cover the remaining tuition fees.
You must reapply every year for the NHS bursary, and applications have to be received within six months of the first day of the academic year.
Fees for suitable non-medical courses, eg, physiotherapy, nursing and midwifery, are usually paid directly by the NHS so eligible students will not be required to pay tuition fees.
They will also be eligible for a Ј1,000 grant, means-tested bursary up to Ј4,395 (Ј5,460 in London, Ј3,351 if living at home, less for courses under 30 weeks each academic year) and a non-means-tested maintenance loan of up to Ј2,324 (Ј3,263 London, Ј1,744 home; all are reduced in final year of study).
If you’re a Muslim student
Muslim students in England are set to be able to get alternative student finance acceptable under Sharia, although there is no news on when this will be made available. We’ll update the guide as soon as we know more.