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Student fees are no longer paid for by the government, which makes going to university an expensive business nowadays. The majority of students find themselves in some kind of debt by the time they reach graduation, with many of them owing in excess of £10,000 or £15,000. It’s a huge burden for any young person, and for their parents too for that matter, and is often the key deciding factor in whether a child goes on to pursue a higher education course. However, if your child has their heart set on university there are ways in which the government – and you as parents – can support them without it costing the earth. Read on to find out. (The information here applies to England.) There are various types of government assistance available depending on a number of factors relating to personal circumstances, such as what course your child has chosen, whether they have been in higher education before, what the total parental income is and where your child lives during term-time. Your child could be eligible for a tuition fees loan to cover the cost of their fees and grants and loans to cover student living expenses. In addition to government benefits, some universities and colleges offer scholarships and bursaries. Students can apply for special student loans to help them while they are studying. These are managed by a company called Student Finance Direct, part of the Student Loans Company, a body run by the Government Department for Education and Skills in conjunction with local authorities. It offers special conditions with its loans, which are much more favourable than commercially available loans provided by banks or other private financial organisations – the interest rate is linked to inflation, so in real terms the student only repays what they borrowed. The loan also doesn’t have to start being repaid until after the student has graduated, and is repaid at the rate of 9% of earnings above £15,000. Student Finance Direct has two types of loan – one for tuition fees and one for maintenance. Fees for university and college courses can add up to as much as £3,000 per year – so for a three-year full-time degree course, you and/or your child could end up paying as much as £9,000 just for their attendance. However, all students are eligible to take out a student loan for fees to cover the full cost of their fees each year. The money is paid directly to the education institution, not to the student. There are some eligibility criteria for the student loan for maintenance, though. All students can apply, but the amount they will be entitled to receive depends on personal and family financial circumstances. 75% of the total loan amount is non-income based and is available to all students. However, the remaining 25% is calculated on the basis of personal and parental income and other factors such as where the student lives while studying. This is known as the ‘income-assessed’ element of the loan. The maintenance loan is paid in three instalments, one at the start of each term, to help students budget throughout the year. Student grants Some students are eligible for a non-repayable maintenance grant to assist them financially, which can be applied for yearly. The full grant amount is available to students whose family household income is below £17,000 per annum, although partial awards are available to students whose family household income is between £17,000 and £38,000 per annum. A special support grant is available to students in certain circumstances – although it’s not possible to obtain both. It’s intended mainly for single parent students or student couples with dependents of their own. Students on a low income who receive (or are eligible to receive) means-tested benefits (e.g. income support or housing benefit), can apply for a special support grant rather than a maintenance grant. Both of these grants are paid directly into the student’s account in instalments at the start of each term. With both student loans and student grants, it’s necessary to apply at the start of each academic year. You can help too Even with this government assistance, being a student brings with it a huge financial burden – not a great way to start their independent adult life. Student loans, despite having favourable terms and conditions, nevertheless have to be repaid after graduation and the cost can add up over three or more years, and nowadays student grants are available to fewer and fewer students – less than half of the student population qualifies for a grant. Most parents want to help out their child as much as they can financially, but most families’ savings won’t stretch as far as funding an entire higher education course for one child – or more. However, there are ways to obtain access to large amounts of cash to help with big expenses such as education. Nowadays more and more people are taking out secured homeowner loans and refinancing their mortgages to cover the cost of student finance for their children. Owing a property means you’re likely to have equity that can be freed up in the form of a secured loan. Equity means the amount of capital available in a property minus any outstanding mortgages or loans tied to it. There are plenty of mortgage providers and other financial organisations that specialise in remortgage products and secured homeowner loans, and they tend to offer more favourable conditions than personal unsecured loans, such as longer repayment terms and lower interest rates, as the risk to the lender is mitigated by the use of your property as repayment security. (However, this means that you risk losing your home if you cannot keep up with repayments, so you must consider carefully before making such a commitment whether you can really afford it.) Have a look on the Internet to see what kinds of deal you could obtain to remortgage your home or take out a secured homeowner loan. It could provide you with a large sum of cash to get your child or children though their college or university course without any financial worries. This article is copyright protected and is not for republishing |
