By: Peter Kenny
If you are about to start University, then it pays to know
about the student loan process. Most students take out some form
of student loan during their study to help them pay for their
fees and living expenses. If you are unsure about how student
loans work, then this guide will be able to help you.
How are loans paid?
Student loans are paid in three instalments each year, usually
once each term. The first payment is usually made by cheque, and
then after that payments will go straight into your bank
account.
How much can I receive?
The amount you will receive depends on where in the country you
are going to attend University, as well as the financial status
of you and your family. You can opt to get a fixed amount per
year, or you can be income assessed and the maximum amount you
can receive will be determined. You can take as little or as
much of this amount as you want. On average the amount you can
receive ranges from £1,500 to £4,500 each year, depending on
your financial status.
How do I pay back the loan?
After you have finished University, you will begin paying back
the loan. Repayments will start from the April after you
graduate, although you only need to repay money after you start
earning above £15,000 per year, calculated on a monthly basis.
The amount you pay back will be taken out of your wages just
like tax, at a sliding rate. You can also pay back more than
this if you wish, by sending money to the appropriate authority.
What is the interest?
The interest on student loans is subsidised by the Government,
and so you only pay back the same amount that you borrowed,
adjusted for inflation. However long it takes you to pay back
the loan, you will only pay back the same amount in real terms
that you borrowed.
What are the advantages of taking out a loan?
The advantages of taking out a loan are that you have money in
order to pay for your living costs whilst at University, meaning
that you can concentrate on your studies rather than having to
work to earn money. This will help you to achieve better grades
and give you more free time. Also, taking out an interest free
loan is better than getting into debt on high interest credit
cards. These debts are more serious and have to be paid back or
they will keep increasing.
Are there any disadvantages?
Obviously, the major disadvantage of taking out student loans is
that you will come out of University with a large amount of
debt. This can seem troubling at first, but you should remember
that most students have the same problem, and because you are
not paying interest the debt is not going to rise. You should
think of the student loans as an investment in your future that
will help you to achieve your career goals.
