ARU Conference - Student Finance

1. ARU Conference - Student Finance Blair Campbell Student Finance Information Team 06 March 2013

2. Objectives • A sound understanding of student finance for 2013 and beyond • Good grasp of repayment • Discussion common areas of uncertainty and difficult questions .... Have fun?!

3. A Student Finance Story There are 4 types of student finance. 1 product for fees, 2 for living costs, and 3 for disabled students or those with dependants. There are 2 types of support that come from universities and colleges. About 3 in every 4 students takes out at least 1 loan. Of the 2 loans, 1 depends on income (the maintenance loan) and 1 doesn’t, the tuition fee loan. The amount of support a student gets to live on depends on 3 or sometimes 4 things: (1) where they study, (2) what year of study they are in, and (3) how much they or their parents earn. For bursaries and scholarships, it might also depend on (4), what grades they get at A level.

4. Why is this important?

5. Top Google ‘Autocompletes’

6. Student Finance in 2013/14

7. Key Points for 2013/14 • Maintenance Grant up by to £3,354 max • Tuition fee loan and maintenance loan remain the same • Continued transition to Gov.uk • First year of part-time online applications

8. STUDENT FINANCE PACKAGE 13/14 Tuition Fee Loan The Student Finance Package Maintenance (Living Cost) Support Scholarships & Bursaries Additional Support

9. TUITION FEES & LOANS

10. TUITION FEE LOAN – FULL TIME • Up to £9,000 per year • £6,750 part-time • Maximum loan depends on fee charged • Optional - take all, part or none of fee loan • Average fee in 2012 was £8,657

11. MAINTENANCE SUPPORT

12. MAINTENANCE LOAN • The majority of the maintenance loan will be available to all students. 65% of the total loan is Non Means Tested. • (Not based on household income) • The amount of maintenance loan available will be linked to where • a student lives and studies while in higher education.

13. COMBINED MAINTENANCE SUPPORT Student living away from home, outside London 2013/14

14. ADDITIONAL SUPPORT

15. Additional Support • Disabled Students Allowances (DSAs) • For students with disability, mental-health condition or specific learning • difficulty. Not affected by household income, based on need. • Childcare Grant (CCG) • Up to 85% of actual registered/approved childcare. Maximum of: £148.75 • per week for one child, £255 per week for two or more children. • Parents’ Learning Allowance (PLA) • Help with course-related costs for students with dependent children. • Amount received will be between £50 and £1,508. • Adult Dependants’ Grant (ADG) • For students with a partner or another adult who is financially dependent • on them (cannot be an adult child). Maximum grant is £2,642.

16. STUDENT LOAN REPAYMENT

17. STUDENT LOAN REPAYMENTS • Nothing to pay until earning at least £21,000 (£1,750 pm) gross. • Full time students repay from April after graduating from/leaving their HE course. (After 2016, if earning over £21,000) • Part time students begin to repay April 4 years after they started their course. (If earning over £21,000) • Repayments are 9% of income over £21,000, deducted automatically by HMRC.

18. STUDENT LOAN REPAYMENTS • If income falls to £21,000 or below repayments will be suspended • Remaining loan balance cleared 30 years after entering repayment process • No penalties will be placed on early student repayments • A student loan is very unlikely to affect your ability to get a mortgage • (The Council for Mortgage Lenders) • Mortgage lenders are most interested in your spare monthly income (‘ability to repay’)

19. STUDENT LOAN REPAYMENT – THE FIGURES Any outstanding loan balance will be cleared 30 years after entering repayment. !

20. STUDENT LOAN REPAYMENT – INTEREST RATES There will be a variation in the interest rate attached to a students loan during study and when earning following graduation: During study until entering repayment • Interest rate is: • Retail Price Index (RPI) +3% Earnings: Below £21,000 • Interest rate is: • Set at RPI Only Earnings Between: £21,000 - £41,000 • RPI plus some amount • between 0% and 3% Earnings: Above £41,000 • Interest rate is: • Retail Price Index (RPI) +3%

21. INTEREST RATES

22. INTEREST RATES

23. STUDENT LOAN REPAYMENT – COMPARISON Repayment for thresholds for existing students up from £15,000 to £15,795, and will rise again to £16,365 this April !

24. STUDENT LOAN REPAYMENT – COMPARISON ! Assumptions: 2% salary growth, 3% average inflation. Based on a report by HEPI on the Government White Paper, available here.

25. STUDENT LOAN REPAYMENT – COMPARISON This year will see the first earnings linked rise in repayment thresholds for existing students. Up from £15,000 to £15,795. !

26. STUDENT LOAN REPAYMENT – DEDICATED WEBSITE www.studentloanrepayment.co.uk

27. STUDENT LOAN WRITTEN OFF … True – loan is written off if you become permanently unfit to work through illness or injury False – you are still eligible to make repayments if working abroad and earning above the threshold False – but you stop making repayments at any time you earn under the threshold True or False? False – but payments will stop being collected, if unemployed/claiming jobseekers allowance Work/live abroad? Earn under 21K? Lose a limb? False – there was a pilot project (RTL) relating to this between 2002 – 2004. It is discontinued Become a teacher? Bankruptcy? Made redundant? You die? Pregnancy? After 30 years? True – or when aged 65 if taken out before 1st September 2006 False – but repayments will stop if earnings dip below the threshold if, say, working part-time True – the debt dies with you, and no one inherits it False – becoming bankrupt does not write off your student loan

28. Websites and Further Info

29. www.gov.uk/studentfinance

30. www.sfengland.slc.co.uk

31. www.thestudentroom.co.uk/studentfinance

32. www.practitioners.slc.co.uk

33. Key Messages for Students Do not be put off by perceived increase in cost Research student finance, along with other UCAS/Uni information – identify challenges Apply online, on time. Deadline 31 May

34. The future Fees may go up (but so what?) Maintenance support may go up Could the government change the policy for current borrowers? Could new governments change the system altogether?

35. Another Student Finance Story Over 3 in every 4 students takes out at a tuition fee loan. Less than 3 in every 4 take out living cost support. For those that do, loans make up less than ½ (or 1 over 2!) of their income. For students who do not take out a loan, there are 3 main reasons: Nearly 2 in every 5 choose not to because of a dislike/concern about debt, and 1 in every 3 because of a concern about repayments. The rest felt they did not need the money. There are 4 groups who are significantly less likely to take the loan: (1) students from professional families, (2) foundation degree students, (3) students living at home, and (4) NHS funded students. 2 groups of students are significantly more likely to take out a loan – those from a routine/manual work family background and those from lone parent familes. Data from Parliament Briefing Paper 29 November 2012

36. Blair Campbell blair_campbell@slc.co.uk www.practitioners.slc.co.uk