Finance Choices
Student Loans
If you are thinking of entering the higher-education system, student loans and tuition fees might be concerning you. Finance Choices has put together this guide on what student loans are and how you can finance your education.
Student loans are available to those entering higher education to help them meet their living costs while studying. The loans are fixed at a low interest rate and are issued by the Government through the Student Loans Company; for most students they act as the main source of financial support (although some parents might argue otherwise!). Once your course has finished - and you are earning enough money - you can start to pay back your loan.
The amount of a student?s maintenance loan depends on where they live and where they are studying. To give you a guide, the maximum annual loan for maintenance you could get as a student in 2004 is shown in the table below. The figures for 2005 are expected to increase in line with inflation.
Loan entitlement for the 2003/04 academic year was as follows:
Maximum student loans for maintenance 2004
Maximum annual loan available
If you live away from your parents? home and you study in London £5,050
If you live away from your parents? home and study outside London £4,095
If you live at your parents? home £3,240
75 per cent available to all students*
If you live away from your parents? home and you study in London £3,790
If you live away from your parents? home and study outside London £3,071
If you live at your parents? home £2,430
*75 per cent of the maximum loan is available to all eligible students regardless of any other income they have. Whether you can get any or all of the remaining 25 per cent depends on your income and that of your family. This will be assessed by your LEA.
Repayments of loans start in the April after you leave higher education, and only once you start earning in excess of £15,000. Repayments are reasonable and depend on the amount you earn, not the amount you borrowed. For instance, if your income was £20,000 you would repay £37.50 per month.
The annual rate of interest is always based on RPI (retail price index) and the interest has been calculated daily at the appropriate rate from the day your loan began. This interest is added to your account every month.
It is important to know that:
The Student Loans Company will normally contact you in the February after your course has finished and will ask you to declare how much money you are earning. They will then calculate your repayment plan for you or grant deferment.
You will then be sent an annual statement every September. This will show you the interest rate that applies, how much interest has been added during the year, how much you have repaid during the year and the balance outstanding.
While maintenance grants will operate under the same system for the academic year 2006/07, student loans for fees are also provided to pay for the exact amount of fees your course requires. In these the money is paid directly to your university or college. For further information see the tuition fees section.
There are also a range of commercial loans available to you. We have compiled a guide to the best offers currently on the market at the Finance Choices Loans Guide
What are student loans?
Student loans are available to those entering higher education to help them meet their living costs while studying. The loans are fixed at a low interest rate and are issued by the Government through the Student Loans Company; for most students they act as the main source of financial support (although some parents might argue otherwise!). Once your course has finished - and you are earning enough money - you can start to pay back your loan.
How much can you get?
The amount of a student?s maintenance loan depends on where they live and where they are studying. To give you a guide, the maximum annual loan for maintenance you could get as a student in 2004 is shown in the table below. The figures for 2005 are expected to increase in line with inflation.
Loan entitlement for the 2003/04 academic year was as follows:
Maximum student loans for maintenance 2004
Maximum annual loan available
If you live away from your parents? home and you study in London £5,050
If you live away from your parents? home and study outside London £4,095
If you live at your parents? home £3,240
75 per cent available to all students*
If you live away from your parents? home and you study in London £3,790
If you live away from your parents? home and study outside London £3,071
If you live at your parents? home £2,430
*75 per cent of the maximum loan is available to all eligible students regardless of any other income they have. Whether you can get any or all of the remaining 25 per cent depends on your income and that of your family. This will be assessed by your LEA.
How and when will you pay this back?
Repayments of loans start in the April after you leave higher education, and only once you start earning in excess of £15,000. Repayments are reasonable and depend on the amount you earn, not the amount you borrowed. For instance, if your income was £20,000 you would repay £37.50 per month.
The annual rate of interest is always based on RPI (retail price index) and the interest has been calculated daily at the appropriate rate from the day your loan began. This interest is added to your account every month.
It is important to know that:
- If you have had four loans or less, you will have to repay your loan in 60 monthly instalments - the equivalent of five years.
- If you have had five loans or more, you can repay your loan in 84 monthly instalments - the equivalent of seven years.
- If you're feeling flush at any given time, you can repay your loan at a quicker rate by increasing your payments or by making additional payments - other people can even make payments for you, if you can find someone to do this.
The Student Loans Company will normally contact you in the February after your course has finished and will ask you to declare how much money you are earning. They will then calculate your repayment plan for you or grant deferment.
You will then be sent an annual statement every September. This will show you the interest rate that applies, how much interest has been added during the year, how much you have repaid during the year and the balance outstanding.
2006 entrants: fee loans
While maintenance grants will operate under the same system for the academic year 2006/07, student loans for fees are also provided to pay for the exact amount of fees your course requires. In these the money is paid directly to your university or college. For further information see the tuition fees section.
Commercial Loans
There are also a range of commercial loans available to you. We have compiled a guide to the best offers currently on the market at the Finance Choices Loans Guide
posted by Barbara Gordon at 4:25 PM
Student Loans
7 Comments:
I would appreciate information relative to student loans. The good, the bad and the ugly.
What kind? There's government subsidized and unsubsidized loans, and then there's loans from private sources (banks, credit unions, loan sharks, etc.). Subsidized is best because it doesn't accrue interest while you're a full or part-time student. Unsubsidized accrue interest from the date the money is disbursed. In both of these cases, interest rates are generally quite good. I have no experience with student loans from private sources. I also received the Perkins loan, but I think that's now defunct (it was federal money that colleges loaned to low-income students).
I have a pretty hefty student loan debt (approx. $70k), but even after I subtract my payments from my income I'm still making more than I would without the college education. Economically, it makes a lot more sense to take the loan and go to college rather than wait until you've saved enough money or take only a few credits of course work a year until you finish a degree.
I do, however, gain some satisfaction that I will probably die before it's paid off.
Mills
Could you direct me to government subsidized loans. My son applied for a student loan for my grandson and was given interest rate of over 8%. He claims that loan money Govt. has basically dried up. Needless to say the loan was canceled. A loan of $15,000 would end up in a payback of over $45,000.
To get the government loan you simply fill out a FAFSA. Unless they've changed the system (it's been five years since I've dealt with applying for financial aid), all you have to do is fill out the FAFSA and the colleges you apply to will send you a financial aid package based on it. The FAFSA covers all federal financial aid (grants and work-study as well as loans) and many colleges use it to determine students' eligibility for financial aid offered directly by the college.
Keep in mind that income is a consideration--federal student aid is designed to help low-income students; the more money the student and his or her parents make or have in the bank, the less aid they're likely to be approved for.
The 8% sounds a bit high, but the rate charged is always based on prime rate. Have rates gone up recently?
Hi all,
I'm a freelance writer working on a story about excessive student loan debt and the problems (financial and psychological) that is causes.
I'm looking to talk to anyone who's accumulated a huge debt, but I'm especially interested in people who have gone to school, done well, and come out with a lot of debt, a liberal arts degree, and a lower paying job (like teaching) that virtually ensures that they'll never be able to pay off their debt burden. Essentially, I'm looking for people who honestly went to college to educate themselves, to better themselves, to earn a degree to get a better job, but came out mired in debt (perhaps impoverished?) because of student loans.
I myself have accumulated about $70K in student loan debt (which I'll probably never pay off) in pursuit of an undergraduate English degree and a Master's degree in Journalism, so it's a story that strikes close to my heart.
If you're interested, please contact me
Lisa, I'll bet there are millions of people out there who went to school at least partly on borrowed money, got an degree AND an education, went on to get a decent job, paid off their loans, married, had a family, bought a house, went on vacations, etc. (not necessarily in that order). People who, without the loans, would have spent years or lifetimes in low wage jobs, just scraping by, never able to afford
little, let alone big, luxuries.
Maybe you'd have better luck if you concentrated on success instead of failures.
While I'm at it - I've heard my whole life about low teacher pay. I don't know about the country as a whole, but I've had a couple of
neighbors who were teachers, one in elementary school and one in high school. Both made incomes from teaching comparable to mine, both lived in the same neighborhood in the same or better (more expensive) housing, they had tenure, they had summers off (although one used that time to work at another job), etc. And they both made more than the median income of the communities in which they taught. In short, they were being paid more than the people paying their salaries made. In my admittedly limited personal experience, teaching is not particularly low paying.
The government should allow the Student Loan Company to share both positive and negative information, online bank Egg has said.
This morning Egg, Barclaycard, the Co-operative Bank, and Abbey said they would share increased levels of information about borrowers to try and help people stay out of financial trouble.
Halifax has already said it is keen to join the scheme, while MBNA and Nationwide are also reported to be making positive noises about it.
And now Egg is calling on the government to permit the Student Loans Company to follow suit.
"It?s crucial that the government opens up data-sharing on student loans now," said Egg chief executive Paul Gratton.
"By the summer of 2009, students could be graduating with debts relating to tuition fees of £9,000, if you add any further borrowing to cover living costs then loans could run into the £10,000s for many students. It is in everyone?s interest for banks to make the best lending decisions and to do this they need to be aware of a customer?s existing financial position."
Egg points out that currently 2.6 million people have a loan from the Department for Education and Skills funded Student Loan Company, with an average outstanding debt of £6,133.
"The government can no longer ignore the need for the Student Loan Company to share lending information. With £3,000 tuition fees being introduced next year and the ability for students to pay these fees with a student loan, we can expect a significant hike in the amount of money it lends.
"By sharing their information, the lending industry will be better placed to help young people manage their borrowings and avoid financial difficulty," Mr Gratton concluded.
Post a Comment
<< Home