Our simple guide to student finance

catherine quinn takes a closer look at the different types of financial support available for students

With the system seeming to change almost annually, it's no wonder many students are unclear about finances. First, grants became loans and fees were charged upfront, then fees were repayable at a later date, and discretionary bursaries were introduced. Confused yet? In fact the newest system is simpler than you might imagine, and it also works to your advantage. An incredible amount of effort has gone into ensuring that students from lower-income households receive the support they need, and making the entire system as straightforward as possible.

Essentially the support available is broken into four basic categories, to cover living costs and fee payment. "The new system of student finance support is better and fairer than the old one" says bill rammell, Minister for higher education. "undergraduates can apply for an annual tuition fee loan of up to £3,070, regardless of their household income, so they don't have to find the money to pay their fees upfront. Students can also apply for a living cost loan to help with rent or food and the loans don't have to be repaid until they have left their course and are earning more than £15,000. Students from lower-income households can apply for a non-repayable maintenance grant of up to £2,765 a year and many universities and colleges are offering non-repayable bursaries to provide additional financial support."

Fees

The financial contribution that students are expected to make towards their tuition costs has risen from £3,000 last year to £3,070 this year, which is in line with inflation. While this might seem like a large payment, it is in fact not even half of what your total fees should be; international students pay at least double this to study in the UK. In addition to being repayable after graduation, the interest on the loan to cover fees is charged at 2 per cent per annum; compare that with the average credit card interest rate of 16 per cent APR.

Loan

The maintenance loan is assessed on household income, so those with parents on lower salaries will be entitled to borrow more. Maximum entitlement is £3,495 for students staying with parents, £4,510 for those living away from home outside London and £6,315 in the capital. Of these figures, 75 per cent can be borrowed regardless of household earnings; so, for example, a student living away from home outside London would be entitled to £3,385 no matter what their parents' salaries or other support they might be receiving. The remaining 25 per cent is assessed on the basis of combined household income. This is based on the information you've already given if you've applied for support, and will be calculated on your behalf. Assuming things run smoothly, your loan should be paid directly into your bank account at the start of each term, making three separate payments throughout the year.

bursaries

The Government have also got a lot more generous with non-repayable grants and bursaries for students. Students from lower-income households can claim up to £2,765, which doesn't have to be repaid. Just how much you might be entitled to can be calculated online using the handy student grant calculator.

The newest aspect of the financial support package available is the bursary system that was introduced last year. Essentially, universities now have money to issue in discretionary payments to students. The amount awarded to an institution is dependent on varying factors, and each can choose to distribute the funds as they see fit. Many simply use the household income criteria that has already been established for fee payments, and issue money on this basis.

"I think a lot of universities are still finding their feet with the way they issue bursaries," says Susan McGrath, head of student recruitment at Manchester Metropolitan University. "We issue it based on the income criteria that has already been assessed by the fees, so it's a very simple process. Some universities [base it on] postcodes or what school or college students have been to, but a lot of universities have changed their method of assessments this year. We're very happy with the way we distribute the money, and 50 per cent of our students will get some kind of bursary, even if it's only £50."

Students on the receiving end of bursaries have found that even small sums are useful in covering course costs. "I wanted to study fine art so I was more concerned about how I would cover the extra costs of art materials and equipment," explains Tom Dinning, 19, from Sunderland, who is studying at Newcastle College. As he comes from a household earning less than £37,475, Tom was entitled to a £500 bursary, allowing him to buy his art materials in advance.

Budget

The tricky part for many students is deciding how to budget their cash. With £3,000 in the bank account it can seem like your balance is the healthiest it's ever been, but a few calculations will reveal how far that money really has to stretch. Most students come out with little more than £50 a week when their rent has been deducted; about enough for a weekly shop and a few well-budgeted nights out.

There are lots of things you can do to help your finances run more smoothly, with the most effective being straightforward planning in advance. The DfES now run a helpful website that includes a financial planner for everything from to loan applications to when to apply for a railcard in time for your first term. Getting a part-time job is also a useful way to stretch your finances further and particularly in your first year, when the pressure of your course is far less.

Finally, remember that there are a tremendous number of savings to be made on nights out on the town. Opt for student nights and start the night at the university bar, and you'll find you can still enjoy a great social life for a fraction of the cost. After all, isn't that what student life is all about?

Tags: tuition fee loan,catherine quinn,income households,finance support,ensuring that students,bill rammell,interest on the loan,student finance,household income,bursaries,tuition costs,entire system,international students,closer look,universities and colleges,undergraduates,higher education,inflation,graduation,grants

Thursday, June 26, 2008 |

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