A student loan provides an essential source of income for students enrolling in university, covering not only tuition fees but also day-to-day living expenses such as rent for student accommodation, food and travel.
Students in the UK are able to apply for a loan from the government-owned Student Loans Company (SLC). The SLC can only offer the government’s financial support to students that are from the United Kingdom or are “settled” here.
Student loans in the UK are provided on a means-tested basis, otherwise known as “income contingent”. What this means is, the ‘entire’ financial situation of the applicant is looked at before a decision is made on the amount offered. This will involve assessing the income of parents and taking into account the income of a student’s home.
Before applying for a loan, it is important to ensure that the course and the university that you wish to attend enable you to be eligible for a student loan. In most cases, eligibility will be granted; however, selected courses at certain universities may mean that taking out a student loan is not possible. There are also different options available depending on whether you are studying full-time or part-time.
The differences between a student loan and a bank loan
A student loan and a bank loan differ in several ways:
Firstly, a student loan is provided by the UK Government and is only available to those enrolling in further education. Before lending out any money, The Student Loans Company will require confirmation of course enrolment at a university.
Secondly, the rate of interest on a student loan is much lower than it is on a bank, or any other type of loan.
Thirdly, regardless of your situation, most other types of loans will require regular repayment. A student loan is different. You will only start to repay when you are earning more than the set threshold (£15,000 for those who started University between 1998 and 2011, £21,000 for those starting after 2012).
Types of student loans
For students in the UK, there are two types of loan: tuition fee loan and maintenance loan. The former is available for all students while the latter is only offered to full-time students. The tuition fee loan will cover the entire amount of course fees while the maintenance loan will provide enough money for living costs.
Depending on the financial situation of the applicant, bursaries and other grants may be available. Unlike loans, these will not need to be paid back.
Some maintenance loans and grants will be paid by the university that you are attending.
From 1 September 2012, university fees will increase for students starting a course. Current university fees are set at around £3,000, and will increase to £9,000. Of course, this will make the availability of student loans in the UK more important than ever.