Tuition fees
You can apply for a student loan to help pay
for tuition fees and living expenses from your Local Education
Authority (LEA). The latter will undertake an assessment of your
parental income, or your eligibility for a loan if you have already
left home.
Loan application forms can be obtained from
your LEA and should be returned to the Students Loan Company
Customer Support Office (CSO).
Universities could charge up to £3,070 a year
in tuition fees for students starting in the 2007-08 academic year,
but no full-time undergraduate is required to pay fees while
they are studying.
Students at Scottish universities only have to
pay £1,700 pa, (£2,700 pa for medicine) and £3,000 at Welsh
universities. Any increase in fees is to be pegged to below the
rate of inflation until 2010.
For details, check out www.ucas.ac.uk, the
UCAS website. Eligible students can take out a student loan each
year via the Student Loan Company, to help pay for tuition fees and
living expenses.
Maintenance costs
Low income students can apply for one of two
grants for maintenance costs. Both grants are non repayable and the
maximum that can be claimed is £2,765 a year.
This maximum of £2,765 is payable to students
with a household income of £17,910 pa or less and a partial grant
is paid on a sliding scale, if your household income is between
£17,911 and £38,330. Over £38,330, no grant is payable.
Student loans
All other students under age 60 can apply for
a student loan as set out below. Up to 75 per cent of the maximum
can be applied for, irrespective of parental income, but the
remaining 25 per cent is means-tested.
| Maximum student loan entitlement 2007-08 |
Full year |
Final year |
| Living away from home |
£6,315 |
£5,750 |
| Living away from home, studying outside London |
£4,510 |
£4,175 |
| Living at home |
£3,495 |
£3,155 |
The interest rates charged on student loans
are set at the rate of inflation each year (4.8 per cent from 1
September 2007). Once you leave university, you will have to start
repaying your student loans based on 9 per cent of your income,
which exceeds £15,000 pa.
The only circumstances in which your loans
will be written off are if you die, become disabled and can never
work again or if your loans remain upaid after 25 years. Contrary
to common belief, going abroad is NOT an excuse for not paying off
a student loan.
There are strict time limits for applying for
certain loans, grants and allowances so be sure to file your
application in good time. For details go to www.nusonline.co.uk
For more information on the help available,
contact your local education authority or the Department for
Education & Skills helpline 0800 731 9133 (www.dfes.gov.uk/studentsupport)
and the Student Loans Company on 08456 077577 (www.studentfinancedirect.co.uk).
If you are going to university in Scotland, contact the Student
Awards Agency for Scotland on 0845 111 1711 (www.saas.gov.uk)
Higher education grant
The Higher Education grant is a means-tested
award, which does not have to be paid, and is worth up to £1,000
for those whose family income is £16,340 or less. If your
income is between £16,340 and £22,324, you will receive part of the
grant. Over £22,325 you will not receive any grant.
other sources of funding
In addition to student loans, you may be
eligible for assistance from other sources such as various grants,
bursaries and endowments from colleges and universities.
American colleges and universities provide a
large number of bursaries and endowments, so it may be worth
investigating courses offered in the US.
Other benefits and allowances which some
students can claim include:
- Grants for part time study
- Access to learning fund (for students in financial
hardship
- Disabled students’ allowance
- Parents’ learning allowance
- Loan parents’ grant
- Childcare grant
- Adult dependants’ grant
- Care Leavers’ grant
- Child tax credit (for students with dependent children)
- Access to learning fund
- Part time students
Mature students
All students under age 50 are eligible for a
student loan, providing they meet the residence requirements.
Students aged 50-54 at the beginning of their course, can apply for
a student loan, but they must be able to show that they plan to
work after they finish their course.
A student with a husband, wife or
partner or another member of their family who depends on them
financially, may be eligible for the Adult Dependant’s Grant.
Saving in advance
Even a small amount saved each month, either by yourself, or
your parents, can grow into a useful sum, providing you start early
enough:
- Anyone over 18 can save up to £7,200 a year into an
Individual Savings Account in the 2008-09 tax year. This can be 100
per cent invested in shares or £3,600 in shares and £3,600 in
cash. Any income or capital gains are tax free on withdrawal.
- Anyone over age 16 can save up to £3,600 in cash within
an Isa.
- Investments made on your behalf by your parents are taxable on
your parents once the income reaches £100 in any tax year. So
savings plans should be set up in your own name, so that you can
benefit from your own personal income tax allowance of £5,435 and
capital gains tax allowance of £9,600 (2008-09).
- Other tax free accounts are available from National
Savings
- If your parents have unmortgaged equity in their property, they
may be able to remortgage to provide you with a lump sum.
Ways to cut costs
The NUS card, which is available to all
students at further and higher education institutions, gives you
access to a number of discounts and special offers at many of the
top high street retailers.
You can obtain a NUS card from your students’
union from August onwards and you can activate it at
www.nusonline.co.uk, where you can also access information about
further discounts.
You can also subscribe to the NUS monthly
newsletter which provides updates on student offers via email. Many
offers are made each September, so it is worth checking at the
start of the academic year. With an NUS card, you can also obtain a
Student Railcard for discounts on rail fares.
Accommodation
One of the largest items of expenditure, after
tuition fees, will be the cost of accommodation, which for most
students, will mean renting for the first time.
This means you need to become acquainted with
the world of tenancy agreements, deposits, dealing with a landlord
and sharing utility bills. When signing up to a tenancy agreement,
make sure that your landlord has signed up for the Tenancy Deposit
Scheme for Regulated Agents.
By so doing, you will know that your deposit
is protected under the Association of Residential Letting Agents
and that there is a dispute resolution procedure, in the event that
there is a dispute over the return of the deposit.
Other matters to clarify with your landlord at
the outset are whether full or half rent is payable over the summer
vacation and that the inventory accurately records the contents and
condition of the property when you take it. Any damaged items
should be reflected in the inventory.
Another potential area of dispute is
sub-letting and changes in tenants to those named on the agreement
during the tenancy.
If you are renting a leasehold
property and you change tenants without your
landlord's prior agreement, such subletting could constitute a
breach of the lease and lead to your eviction at the insistence of
the freeholder.
To avoid problems with your landlord, ask for
a list of approved landlords from your students’ union, or if this
is not possible be sure to use an agent which is a member of the
Association of Residential Letting Agents (ARLA)..
TV licence
Remember that you must
have a TV licence if you have a television in your
accommodation. However, if you purchase a licence in October, you
can claim a refund for July, August and September if your tenancy
ends in June. You can purchase a licence online at TV Licensing and
choose from a number of ways to pay, including direct debit.
Alternatively, call 0870 242 1417.
Insurance
If you have valuable items, you may wish
to buy a contents insurance policy to protect against theft.
Student lodgings are an easy target for burglars because many
students own large amounts of electronic gagetry, such
as laptops and moblies which are easy to
steal.
The NUS recommends
Endsleigh Insurance because it specialises in the student
market.
Endsleigh offers three tips to students when buying contents
insurance:
- Don’t underestimate the value of your belongings
- Don’t assume that you’ll be covered by your parents’
policy;
- Be sure to obtain cover for ‘walk in theft’ (ie where there is
no sign of a 'forced entry') – a common feature in theft from
student accommodation, but not standard with other policies.
Being a student landlord
Whil most students have no choice
but to rent or live in a Hall of Residence, you could consider
buying a property yourself, with the help of your parents.
This will normally involve asking your parents
to act as guarantor to the mortgage so that you can borrow more
than you would normally be entitled to.
By acting as guarantors, your parents are
jointly and severally liable with you for the mortgage repayments
and their home will be used as security for the loan.
You can normally obtain a buy-to-let mortgage
for 75 per cent of the purchase price. Renting out spare rooms to
three or four friends should cover 125 per cent of
the mortgage repayments, as most lenders will require this as
a condition of granting a buy to let mortgage..
The mortgage should be taken out on an
interest-only basis, as mortgage interest can be offset
against any income tax due on the rental income.
As the property will be partly your ‘principal
private residence’ and partly a buy to let property, there are
various tax reliefs which will mitigate the effect of capital gains
tax, which will be charged at 18 per cent, when you come to
sell the property.
If you are renting out to one person as a
lodger for less than £4,250 ayear, you can do so tax
free, using the annual 'rent-a-room' allowance of £4,250.
Rental income above that will be treated as
the rental income of a buy- to- let landlord. You can offset any
income tax due on rental income (after the deduction of mortgage
interest relief and various allowances) against your personal
income tax allowance of £5,435 (2008-09).
Remember that you will have to repair and
maintain the property, insure it and decide what to do with it in
vacations. Being a student landlord can be extremely tax effective,
providing you go about it in the right way so be sure to take
expert tax and independent financial advice.
Working while you're a student
Research shows that 58 per cent of students
say they have to work in term time and 85 per cent during the
summer vacation in order to make ends meet.
You can find part time employment, either via
one of the 110 campus job shops or through a high street employment
agency. Either way, you should be aware of your rights with regard
to minimum pay, tax, union membership and health and safety
legislation. (For details visit www.morethanwork.net)
If you have not already used up your personal
income tax allowance of £5,435 (2008-09), there is no need to pay
tax on holiday pay.
To avoid being overtaxed on holiday pay, ask
your employer to complete a P38(S) - a standard form issued by HM
Revenue & Customs. This will ensure you pay no income tax on
holiday pay during the 2008-2009 tax year which ends on 5 April
2009.
It will also ensure you pay no National
Insurance Contributions if you earn less than £100 a week. This
threshold includes all income from work, as well as any other
taxable income, but excludes student loans, scholarships, grants
and tax credits.
P38(S) does not apply to part-time work
undertaken during term time, but applies to all holiday periods
such as the summer months, Christmas and Easter.
If have paid too much tax in the past, you can
claim it back up to six years after the relevant tax year ended.
You need a repayment claim form which you can get from your local
tax office or direct from HM Revenue and Customs.
Earnings above the personal allowance
threshold of £5,435 (for those who complete the P38(s) form) are
taxed just like any other taxpayer - at 20 per cent up to £36,000
and 40 per cent thereafter.
If you earn less than £5,4355 in 2007-08, you
can put your hard earned cash into a gross paying bank or building
society account. To receive gross interest, you need to
complete form R85.
Once your balance exceeds the personal
allowance for the prevailing tax year, you should inform the bank
or building society so that your savings are taxed at source.
Choosing a bank account
If you are about to start higher education,
you are likely to be inundated with offers from the high street
banks to entice you into opening an account with them.
Student bank accounts typically offer you
freebies such as DVDs, vouchers and discounts which can look
attractive, but you need to check out the underlying terms and
conditions of the account before signing up.
For instance, the most important features
are:
- rate of interest on credit balances
- rate of interest on authorised overdrafts
- rate of interest on unauthorised overdrafts
- other charges levied for normal banking services
Many student accounts offer introductory
offers such as a free overdraft up to a certain amount, in which
case, you need to ask how long this lasts and the ‘revert to’
rate once the 'teaser' rate ends.
You may also be offered a credit card, in
which case, you need to ask the same questions – how long any
offers last and what the deal is thereafter.
If you do take on a credit card, try to make
full repayment on time each month or you can easily rack
up huge debts. Also never use a credit card for cash
withdrawals as this is a very expensive way of accessing
cash.
Four golden rules to remember
If you need to go overdrawn, agree an
authorised credit limit with your bank. Unauthorised overdrafts are
extremely expensive and you will incur extra charges, as well as a
very high rate of interest
Don’t use your credit card to withdraw cash.
Interest starts clocking up immediately and the interest rate will
be higher than for purchases.
Avoid store cards as these are even more
expensive than credit cards
If you have debt problems, seek advice from
your lender immediately. Don’t bury your head in the sand,
thinking the problem will go away, because it won’t.