Like all parents, you want the best for your kids. You want the best schools and the best education but these days that is becoming more of a luxury than a privilege. So, if you have aspirations of sending your child to University, the chances are that you are starting to think about how you can finance it. You are looking at tuition fees and getting concerned at how much they have risen. Here is a guide to what you can do to start preparing your finances and theirs for university life.
Tuition fee loan – to cover fees and there is a loan to help pay for fees such as rent books and travel.
How much will they need to borrow?
Universities and colleges are now able to charge full-time students up to £9,250 a year in tuition fees. However, this only applies to gold, silver, or bronze-rated universities. If not, the maximum is £9,000 per year.
How much can they borrow with a maintenance loan?
If your child is going to go to a university in London, the amount they can borrow is higher due to the cost of living in the capital (£11,672).
After this amount, it is up to you and your child, and you will need to make up any shortfall in the amount. Almost 50% of students rely on their parents for financial backing and additional help with things such as living expenses.
Around one in three students will try to make ends meet by working part-time while at University.
When do I need to pay my child’s tuition fees?
It is not generally expected that you pay the whole amount as a one-off fee.
Your child can apply for a tuition loan and once accepted; the money will go straight to their University. So, your child can start University without the burden or worry until they have graduated and found a job with a specific salary. They also needn’t worry until they are earning above the repayment threshold.
It is not advised to take out a personal loan as you will not get the same rates and this option will always work out more expensive in the long run. Also, interest rates on student loans are very competitive when compared to other loans on the market. There is a bonus that student loans will expire after 30 years. Currently, 60% of students never get fully paid back.
Applying for a means-tested finance
The phrase ‘Means-tested’ finance is when a student must submit details about their household income. Allowing the student finance body to assess how much they are eligible to receive in the form of maintenance and support.
This system works on a sliding scale. So, people from a household with a lower income are eligible for more help, ensuring those who need the extra help, get it.
The term’ Household income’ refers to what you and other adults who you live with are earning annually. You will be required to submit photocopied proof of these amounts.
Don’t leave it to the last minute to apply as the process can take up to six weeks. You must provide any evidence that they request as soon as possible. If they don’t get the information in time, then your child’s student finance might not be ready for when their course starts.
You do not need to submit your information about household income otherwise known as non-means tested if you are applying for finance. All students can apply for a basic rate of maintenance support. The basic rate is irrelevant to the household income. This base rate amount is based on where students live and study. But it is worth submitting the information as your child will likely be eligible for more. And this extra amount could make a big difference during these precious times.
A Maintenance Loan will need to be repaid after graduation, alongside the Tuition Fee Loan.
You must let Student Finance England know if there are any changes to your household income so they can reassess if needed. If your household income drops by 15% or more since the previous tax year, you can then fill in a Current Year Income (CYI) assessment form. Completing this form allows Student Finance England to reassess the application. And could even mean that the student is eligible for more funding.
Preparing ahead is a great way to start, but it is never too late. Even if you only have a few months, you can still start putting some savings to one side. The first few months will work out to be the most expensive as you will need to buy books, and computers and put down a deposit on living accommodation. It is also worth getting your child to start to research as well, as banks offer better interest rates to under-18-year-olds.
Preparing a budget
If your son or daughter hasn’t had much experience dealing with money, then you can help them by preparing a budget.
You need to include things such as:
- What will be their biggest costs while they are away at University?
- What are their ongoing expenses such as food or rent?
- What are the one-off payments such as books or computers?
- Is there any other income they may have, such as loans or wages from a job?
It would be a good idea to help prepare the budget with them before they leave for University and you can help outline how much they must live on each week.
Renting out your child’s room
One way of finding a little bit of extra income to help pay for the fees is to consider getting a lodger while your child is away studying.
Many professionals only need a room during the week, meaning this means your child could still come home at weekends when they want to.
DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.