From applications to funding, accommodation to career goals, we’re donning our parent cap to unpack the world of university and Student Finance.
So your son or daughter’s off to university? Congratulations! It’s a brilliant achievement and an exciting step, but like any big life event, university often whips up plenty of uncertainty for all involved.
Since 2007 Save the Student has been the resource millions of students trust when it comes to improving their finances. So, unlike other sites, we have ring-side seats for the common issues they face at university.
For instance, did you know that the average Maintenance Loan covers just 78% of student living costs? And were you aware that in many cases it’s parents who are ‘expected’ to help bridge the gap?
We’ll reveal exactly how much that might be for you in this guide, as we pull back the curtain on university life and Student Finance…
Is university worth it?
Without sounding too much like conspiracy theorists, the mainstream media often obsess over headlines about students graduating with a debt of as much as £60,000.
But as you’ll soon see, Student Loans have very little in common with normal commercial debt and the repayment terms are designed to be manageable. The vast majority of graduates (83%, according to the IFS) will still have some or all of their debt outstanding before it’s wiped 30 years after graduation.
So our big message is that while we don’t agree with the sky-high fees, university is far more affordable than many believe. In most cases, the wider benefits greatly outweigh the costs (personally and professionally).
Research by the IFS has shown that over the past two decades, graduates have earned 35% more than school-leavers. It’s been predicted that 46% of jobs in the UK will require a degree by 2022, suggesting that despite the costs involved, having a degree will likely lead to better employment prospects and more money in the long term.
Having said that, getting a degree is still a serious financial investment. With tuition fees as much as £9,250 a year, many people rightly question whether university is worth the money. Of course, the path isn’t for everyone, and there are alternatives like apprenticeships and school leavers programmes.
Important university and higher education organisations
UCAS (the University and Colleges Admissions Service) is the service that students use to apply to university. Students don’t apply to individual universities – they submit one application through UCAS who then distribute it to the student’s university choices.
This keeps the application process straightforward and centralised, with everything from the personal statement to university offers stored on the students’ UCAS portal.
Student Finance is the organisation responsible for providing Tuition Fee Loans and Maintenance Loans to students at university.
Students apply for their funding through the relevant Student Finance organisation in their country of residence, not the country where they’ll be studying e.g. a student from England planning on studying at the University of Edinburgh would still apply through Student Finance England.
Student Loans Company
The Student Loans Company (SLC) is a government organisation which organises the repayment of Student Loans.
They work alongside HMRC to collect Student Loan repayments in line with graduates’ salaries, and graduates must inform the SLC if they move abroad.
University admissions departments
While students don’t apply for places through individual university admissions departments, students will need contact them if they have any specific questions or problems with their applications.
Students also contact university admissions departments if they’re applying through UCAS Clearing (a service for students who don’t achieve the grades needed to meet their university offers).
University accommodation department
Students apply for a place in university-managed halls of residence through the university accommodation department. This will be who students pay their rent to when living in halls, and who they’ll contact for any accommodation-related problems or questions.
The National Union of Students is a confederation of student unions’ from across the UK. It works to champion and protect student rights, and campaign for a better deal for students.
Most students will probably know it best for the TOTUM/NUS Extra card, a student discount scheme which saves students money at a wide range of shops and brands.
Helping your child apply to university
The first hurdle on the journey to university is the application process. It’s relatively straightforward, but there are some key deadlines to keep an eye on.
Applying to university can be a stressful process for students, especially with the added pressure of A Level results. But if you’re both clued up on how it all works, you can help take some of the stress off.
Here’s a brief timeline of a typical university application process:
- Choose a subject – First of all, your child needs to decide what it is they actually want to study at university. This might be a subject they already enjoy at school, a subject with a specific career in mind or something completely new. Don’t forget joint honours degrees, which combine two subjects together in one course, are also an option
- Use UCAS to search courses – Make sure they check entry requirements and are choosing courses that are achievable and in line with their predicted grades
- Attend open days – University open days will give your child a chance to get a feel for the university and department they’ll be studying in, as well as speak to lecturers and tutors to ask any specific questions they might have
- Choose courses – Each student can select up to five choices (four for Medicine, Dentistry and Veterinary Medicine/Science applicants)
- Complete the UCAS application – This involves filling in personal details and education history, as well as writing a personal statement of 4,000 characters which is your child’s opportunity to sell themselves to the universities
- Apply for Student Finance – Create an account online and make a provisional application for Tuition Fee and Maintenance Loans (see below for more info)
- Wait for offers and A Level results – Depending on the subject, your child might have to attend interviews or take exams before any offers are made. The student will then choose a firm and insurance choice from the offers they receive, and as long as they get the grades, they’ll be off to one of their chosen unis! A Level results day isn’t always that simple though, so be prepared for all possible outcomes.
Important dates and UCAS deadlines for 2019 entry
How Student Finance works
When the government increased tuition fees to £9,000 a year (a figure which has since gone up to £9,250 a year), people were quite rightly outraged. But it’s not as scary as it seems – it’s actually the cost of living at university that most parents should be focusing on.
This quick Student Finance 101 will tell you everything you need to know, including how much money your child is likely to receive at uni and how much you might need to contribute.
The Tuition Fee Loan
Pretty much all UK and EU students studying their first undergraduate degree will be eligible for a Tuition Fee Loan – regardless of how much their parents earn.
This loan will cover the complete cost of the degree, which will be a maximum of £9,250 a year. Student Finance will pay this money straight to the university, meaning the student will never see it.
This means that students don’t really need to think about tuition fees at all – until they start paying it back, of course…
The Maintenance Loan
The Maintenance Loan is where things start to get a little bit more complicated. This is the money students receive to cover their living expenses while they study, but how much your child receives will depend on how much you (the parents, or the household) earns.
Basically, the higher the students’ household income, the less money they’ll get, as it’s assumed the students’ parents will be able to cover the shortfall.
Unlike the Tuition Fee Loan, this money is deposited directly into students’ bank accounts in three instalments throughout the year, and it’s up to them to learn how to budget it. Our complete guide to budgeting at university has some advice on how to do this.
There are a couple of other factors which will determine how much money your child receives in their Maintenance Loan. Students moving away from home receive more than those staying put (to cover rent costs) and those studying in London receive more to cover the capital’s higher cost of living.
Maximum Maintenance Loan amounts 2019/20
These numbers show the maximum amount students can apply for – they don’t have to take the full amount of money if they don’t want to. The maximum amount your child can apply for will also reduce in their final year, as they won’t be a student over the summer and therefore won’t be given money to cover this time.
So where does household income come into it?
Basically, only students with a household income of £25,000 or less will be eligible for the maximum amount displayed in the table above.
From that point onward, the higher the household income, the less money students can apply for – up until students with a household income of around £62,212 or above, who receive the minimum amount of £4,168 (based on a student living outside of London and away from home).
The table below has all the details:
Maintenance Loan amounts based on household income
You’ll have to fill out a lengthy form from Student Finance to declare your household income – but don’t forget, only taxable income counts. If you’re unsure what counts as taxable income, check out this list from the government.
You’ll also have to provide your National Insurance Number, which Student Finance will then use to check how much you’re earning.
What if you’re a single parent, separated or divorced?
In this instance, the parent/household assessed is the one upon whom the student is financially dependent. This usually means the household in which the student lives most of the time.
Remember that if said parent now has a new partner, Student Finance will include their income as part the overall household income – even if that partner doesn’t necessarily have any financial responsibility for the student.
If you are a single parent you may be eligible for further support or funding from the university finance department, so it’s always worth asking the question.
What if you have more than one child at university at the same time?
There will be space on the application form for parents to declare any other children they have who are at university or college at the same time.
For each child you have at university, Student Finance will deduct £1,130 from your household income to accommodate this. So if your household income is £40,000 but you’re already supporting another child through university, Student Finance will reduce it to £38,870, entitling your children to more money from their Maintenance Loan.
However, most parents and students report that this deduction is nowhere near enough to accommodate the strain of supporting two or more students through higher education simultaneously.
What if you don’t give your children any money?
We’re often contacted by parents who ask what happens if you don’t (or can’t) give your children much money while they’re at uni – will the government make up the shortfall? Unfortunately, the answer is: no.
Similarly, if your partner who’s included in the household income calculations doesn’t actually contribute any money to your child, there’s not much you can do.
Sadly, whether or not you can or do choose to help with your child’s finances isn’t really relevant – the assessment will only take into account your household income.
How much money should parents give their children at university?
Not all parents are in a position to give their child money at university, but of those who are, many don’t know how much is a suitable amount to give.
Our latest Student Money Survey found that parents contribute on average £138.50 every month to their child at uni.
Every individual situation is different, of course – some students might choose to get a part-time job so their parents don’t need to provide as much. Or, in some cases, students might have to get a part-time job, as even contributions from their parents won’t be enough to cover student living costs in full.
Many factors, such as rent, the amount of Maintenance Loan your son/daughter receives and the general cost of living in the area that they’re studying will affect how much you’ll need to provide.
To see a suggested yearly parental contribution, use our Parental Contributions Calculator below.
This will show you the maximum Maintenance Loan for a student in the same living situation, what your child will get based on your household income and the difference between the two – which is how much you’re ‘expected’ to pay.
The bottom line is that the Maintenance Loan system is set up in a way that expects parents to contribute – even if this isn’t made explicitly clear to students when they apply.
Our research has found that average student living costs are £770 a month, while the average Maintenance Loan is just £600 a month – leaving a shortfall of £170 a month. As such, there’s a high chance that the Maintenance Loan provided by Student Finance won’t be enough to cover everything your child needs at university.
This is another reason why it’s a good idea to encourage your child to start saving up some money before they go to university. Even just a few hundred pounds can go a long way when it’s the end of term and their Maintenance Loan has run dry.
Repaying Student Loans
When your child graduates from university, their Tuition Fee Loan and Maintenance Loan will be bundled together into one lump sum – meaning they could be graduating with a debt of over £50,000.
We realise that this sounds like a large amount of debt to be in, but you should never be tempted to pay it off for your son or daughter.
While we are against the high tuition fees, the Student Loan repayment system actually makes repayments manageable and in line with your child’s salary. Plus, any money they haven’t paid off will be wiped after 30 years. Here’s how it works:
- Students only start repaying their Student Loan from the first April after they graduate, and only then if they’re earning over a threshold. If they’re earning less than that they don’t pay back a penny
- For students from England and Wales this threshold is £25,725 a year, whereas for students from Scotland and Northern Ireland it’s £18,935 a year
- Graduates only pay back 9% of anything they earn over that amount – so if a graduate from England was earning £30,725, they’d pay 9% of £5,000 (£450 a year)
- The repayments are automatically docked from graduates’ payslips so they don’t have to do anything. If their pay drops to £25,725/£18,935 or below, their repayments also stop.
To give you an idea of exactly how much your child will be paying on a monthly basis, this table breaks it down by salary. Note: This table applies to students from England and Wales only.
Student Loan repayments based on salary
What is the interest rate on Student Loans?
People often forget that a student’s debt does just account for the the Maintenance and Tuition Fee Loans – it also includes interest, which is applied from the day your child starts university.
In simple terms:
- Students from England and Wales – While studying and up until the April after graduation, interest is 6.3% (RPI* + 3%). After graduating, it’s RPI* plus a linear scale from 0–3% depending on graduate earnings. It’s capped at RPI* + 3% when graduates start earning £46,305 or more
- Students from Scotland and Northern Ireland – Student loan interest rate is 1.25% (Bank of England base rate + 1%).
*the RPI figure is updated each September using the RPI from March of the same year. In March 2018 it was 3.3%.
Should students pay off their Student Loan early?
When students and parents are faced with the eye-watering interest rates on Student Loans, many are keen to repay the loan as soon as possible. Because the more interest that accumulates, the more you end up paying off in the long-run, right?
Well, yes and no. Research has shown that 83% of students won’t repay their Student loan before it’s wiped after 30 years. This means that if your child (or yourself) decides to pay off the loan early, there’s a very high chance you’re giving away money that you would likely otherwise have kept.
The one exception to this rule is if your child is sure they’re going to be on a very high salary for the majority of their career, and are therefore likely to pay off the loan in full. In this case, it might be worth paying off early to avoid the extra interest – but make sure you do the calculations first.
For the vast majority of students (and their parents), we would strongly advise against paying the Student Loan off early.
Our Student Loan repayment calculator should give you a good idea of how long it will take your child to pay off their loan (and how much they will actually end up paying back) based on their starting salary.
Accommodation at university
Deciding where they’re going to live at university is a really exciting process for new university students. After all, if they’re moving out for the first time, it’s a huge step.
Make sure you can help them make the right decision by being aware of the different options they have for university living:
Staying at home
If your child is planning to study at a university close to home, they might decide to commute rather than move out. This is perfectly normal, and thousands of students do it every year. In fact, research shows that ‘commuter students’ are on the rise, particularly in London.
If your child does choose to stay at home for uni, they could end up saving thousands of pounds by not paying rent – although you will need to factor in the cost of public transport or a car. Plus, students who live at home receive a smaller Maintenance Loan than those who move out.
Lots of students worry that they’ll find it more difficult to make friends at uni if they stay at home. Most students should easily be able to make friends on their course or by joining clubs and societies, but they might need to make more of an effort to attend events and socials than those in halls who are naturally surrounded by students all of the time.
Moving away from home
Thousands of students choose to move away for university every year, and for some, living independently for the first time is an integral part of the uni experience. Here are their options:
University halls of residence are properties owned and run by the university itself (or, increasingly, a private company contracted to run the property on the university’s behalf).
Most students who select a university as their firm choice and apply for accommodation by a certain deadline will be guaranteed a place in university halls – but there are some exceptions (particularly with unis in London), so make sure to check with the university on this.
Halls is traditionally where most students live in their first year of uni, before moving into private housing in their subsequent years of study. Here are some key things to bear in mind:
Private halls are very similar to university halls, except they’re owned and run by a private company which may not be affiliated with the university at all.
They’re purpose built student accommodation blocks and, like halls, the rooms are normally arranged into small flats with shared kitchen and living areas.
The main downside to private halls is that they’re (usually) much more expensive than university halls or private housing. In recent years there’s been a rise in ‘luxury student living’, with some private halls including rooms with sizeable TVs and professional cleaning services – and a hefty price tag.
Most students will move into private housing in their second year of uni onwards, but it’s also a good option for postgrads and first years if they’re unable to get a place in halls.
Unfortunately, the student housing market is plagued by dodgy landlords and sub-par properties, so it’s worth doing some serious research here and getting clued up on tenancy rights.
Most universities or students’ unions will have an accommodation service which can point you towards reputable landlords.
Make sure your child views the property before they sign a contract – and use our guide to what to look for when viewing houses to ensure they’re not getting a bad deal.
How to prepare your child for moving out
If this is the first time your child has lived by themselves, they might be lacking in some of the skills needed for independent living. The best thing you can do is take some time to teach them the things they’ll need to thrive when they fly the nest:
- Cooking skills – Make sure your child knows how to make basic meals, as well as stuff like how long food keeps for before it goes off and what food can be frozen. Invest in a student cookbook like Nosh for Students, which should help ensure they don’t resort to pizza and chicken nuggets
- Laundry – Give your child a quick washing machine tutorial, make sure they know how to split up their clothes into whites and colours, and show them what kind of washing detergent/conditioner they should be buying. Also ensure they know how to use an iron without burning their clothes
- Bills – It’s likely bills will be included with rent in halls, but in private housing the chances are it’ll be up to the tenants to sort it out. Make sure they’ve got gas, electricity, water and broadband covered. Our complete guide to student bills has all the cheapest deals and advice on how to set up, switch and split bills, and remember that although students don’t have to pay council tax, they may have to apply for an exemption.
What to take to uni
Do they really need six frying pans? Is a beanbag a little excessive (it is)?
If you’re wondering exactly what your child needs to take with them to university, our complete packing checklist has you covered.
We’ve broken it down into handy sections covering the kitchen, bedroom, bathroom and more, plus we’ve got all the things students tend to forget – a doorstop, for instance, is essential.
Preparing your child for employment
While graduating from university is an amazing achievement, often a degree alone is not enough to impress employers when students are on the hunt for their first graduate job.
If you or your son/daughter is worried about how they can prepare for the world of work post-graduation, here are some key things they can be thinking about while they study:
Apply for work experience and internships
Getting hands-on experience in the world of work through an internship or placement will stand them in good stead when they go for job interviews, and can provide a good foot in the door of competitive industries.
However, make sure they know their rights and aren’t getting ripped off by working for free – companies should at least offer some form of reimbursement.
Clubs and societies
Most unis will have a society for pretty much any hobby or pastime you can think of, so whatever your child is interested in, they’re bound to find a way to keep it up at uni.
Not only is it a great way to make friends and demonstrate extracurricular interests outside their studies, students can run for a committee position which will help build leadership and teamwork skills – something employers love to see.
Our latest National Student Money Survey found that 76% of students turn to a part-time job at some point during university. For many it’s a necessity for financial reasons, but a part-time job also provides students with skills they can put on their CV and expand on in job applications.
You might think that when students go travelling it’s all about getting drunk with their mates, but research shows that travelling actually makes students more employable.
From language skills to awareness of other cultures, budgeting to problem-solving, travelling has more benefits than you might think.
Do you have any further questions about university or Student Finance? Get in touch with us via email or social media and we’ll do our best to get back to you!