It might seem a touch premature given what’s happening in the world, but for anyone planning to start university in the autumn the deadline for student loan applications falls on 22 May. If you – or your offspring – are in this boat, here’s what you need to know about the process.
Do I really need to apply now?
No. Although it’s described as a deadline, it is not a hard and fast cut-off date. The Student Loan Company (SLC) asked students to apply early to give its staff a chance to start processing applications. Across all year groups about 1.3 million students head to college in England alone each year and it wants time to deal with everyone. Students going back for their second or later years are encouraged to send their applications by 19 June.
Crucially, you don’t need a confirmed place or to have even decided which university you want to attend. There is no downside to doing it now as you are not tied in to anything.
What am I applying for, and how do I do it?
Most wannabe students (outside Scotland at least) will need to apply for a tuition fee loan, which will cover your course fees – £9,250 a year. This is paid directly by the SLC to your university or college, but only after you have enrolled.
Next up is the maintenance loan, which is designed to help with living costs such as accommodation and food. There is no obligation to apply for this. Unlike the fees loan, the sum you are offered will be based on your household income, whether you will be away from home, and whether you are studying in London or not. The maximum available is £12,010 a year for those living away from home in London, and £9,203 for those living away from home elsewhere.
The applications are now all done online. They take about 30 minutes and you will need your National Insurance number, passport and bank account details. Go to gov.uk/studentfinance, studentfinancewales.co.uk,
saas.gov.uk or studentfinanceni.co.uk, depending on whether you live in England, Wales, Scotland or Northern Ireland.
Scottish students don’t pay tuition fees at home. In Wales there are means-tested grants.
If you’re under 25 and have no contact with your parents, you might be able to apply as an “estranged student”. This means that your parents’ income won’t be taken into account and you will be entitled to a full loan.
The parents or guardians of those applying for maintenance loans will be sent an email asking them to sign in and declare their income, which is checked with HMRC.
Be aware that in most cases the maintenance grant will not come close to covering the entire cost of being at university, even if you take up the life of a monk. Parents are expected to make a contribution.
My household income looks very uncertain – what should we do?
The maintenance loan calculation for students starting in 2020 is based on their parents’ 2018-19 tax year income, and that is what should be put down in the first instance. However, if your income this year is going to be at least 15%, higher or lower – which could apply to a large number of households this year – parents should apply for a current year income (CYI) assessment.
“The advice is to make us aware of any significant changes in parental income at any time,” SLC tells Guardian Money.
Students who get maintenance loans on the basis that a parent was not working could find any overpayment clawed back in the second year. Equally, a student from a household that had lost an income, could miss out on vital payments if the SLC is not updated.
Once the application is processed – which normally takes six to eight weeks – the student is sent a “student finance entitlement” letter.
If I apply for the loan and end up not going, what happens?
Nothing: the only thing that you will have lost is the time spent filling in the forms. Neither the payment of the fees to the university nor the maintenance loan payments are made until the SLC has seen evidence that the student has enrolled.
Ideally you will tell the SLC that you no longer wish to attend. But if you do not sign on to your chosen course the loan lapses.
Given the uncertainty surrounding how and when courses will restart – with the possibility that the first term could be entirely online, many prospective undergraduates will want to hold on to that important safeguard.
If you decide to defer your start date until 2021 you will need to apply again next year for finance.
I’d rather wait and see how things pan out – will that have any impact?
No, and you are unlikely to be alone. The system is already designed to deal with students going through clearing and applying for loans at the last minute. In theory, students can apply up to nine months after they started a course. Those leaving it very late could face a few weeks or possibly a month or two without maintenance payments, meaning they will require some money to fill the gap.
When do I repay the loans?
Not until you start work. Payments are collected automatically and currently kick in as soon as your income is above £511 a week or £2,214 a month (before tax and other deductions) – that’s just over £26,500 a year.
You will be racking up interest from day one. While you are studying, the rate is currently 5.4%. When you graduate, it will depend on whether you are earning enough to repay the loan. If you are not, the interest rate falls – it is 2.4% at the moment.
But, you are unlikely to ever pay off all of your debt. After 30 years the loan will be cancelled, and only high earners are likely to have repaid everything by then. In the meantime, the loan will not affect your credit rating.