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Lessons for parents on student loans

university students‘A’ level results are due on 16th August. If your child is planning to go to university in the autumn you will soon hear from the Student Loans Company. They will need information from parents to support their child’s application for student loans. As many parents will have studied in the halcyon days before student loans, the complexity of funding tertiary education could be baffling. Here’s the Student Loans Company’s guide for parents of soon-to-be students.

1. Students have two separate costs to fund: their living costs and tuition fees. They can get financial help towards both of these. A Maintenance Loan helps with living costs and all eligible students will get something – but they can apply for more based on their parent(s) income. If you have a household income of £25,000 then your student child could get a maintenance loan of £8,700 a year. More details here.
2. Then there’s the Tuition Fee Loan worth up to £9,250. How much a student can get isn’t down to their parent(s) income – the fees are set by the university. There’s also the Disabled Students’ Allowance for those who have a disability and need help with essential costs such as transport.
3. Your child needs to apply for finance as soon as possible as applications can take several weeks to process: here’s the link to use.
4. Once your child has applied, you’ll get an email so you can provide details of your income for the 2016-17 tax year and your National Insurance number. If your child is only applying for the basic Maintenance Loan, not one based on your income, you don’t need to do anything to support their application.
5. Maintenance Loans are paid in three instalments in line with term dates. Your child will start repaying this and the Tuition Loan once they’ve left college but only when they’re earning over the threshold which is currently £25,000 a year. Then they repay 9% of what they earn over that level. After 30 years, they are cancelled – even if your child never earned enough to repay a penny of the loan.

If you still have questions then there’s useful information here – and even discussions on Facebook you can join in here. Fingers crossed for results day!

Also, see our guide to student banking here: best to get sorted in advance..

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Saturday, 22 September 2018