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debt advice - student_debt

debt advice - student_debt

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Published by Debt Advice
Free Debt Advice and Debt Management Planning guides. Avoid bankrupty today. www.InsolvencyHelplineNews.co.uk
Free Debt Advice and Debt Management Planning guides. Avoid bankrupty today. www.InsolvencyHelplineNews.co.uk

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Published by: Debt Advice on Nov 25, 2008
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Student Debt

According to recent figures the average graduate debt has risen by over \u00a34,000 since 2003 to \u00a312,180. Debt levels vary considerably depending on the length of your course, where you are studying and the level of financial support received. As student grants have now been abolished and charges are made for tuition fees, many students now reply on student loans as their main source of income. They are also increasingly relying in various forms of credit in order to survive an average three year course.


The information below gives a brief summary of the sources of financial help available. More detailed information can be obtained from the Local Education Authority


for Education and Skills (DFES) or National Union of Students (NUS).

You may have to pay a contribution towards your tuition fees. For 2004/05, the most you will have to pay towards your fees is \u00a31,550.\ue000Phone us for advice.


You may be able to get help from your LEA towards your tuition fees by applying to the LEA where you live prior to starting your course.


The amount you will get will depend on your income and that of your family unless you are classed as an \u201cindependent student\u201d.

If you are an independent student and you have a partner their income will be assessed.


If you are a student with disabilities you may be eligible for a Disabled Students Allowance which can help with costs you incur, in attending your course. These are available to full-time and part-time students with disabilities. Unlike a student loan, DSA assistance does not have to be repaid. Talk to your LEA to see if you can claim.CARE LEAVERS GRANT

If you are a student who has left care you may be able to claim a Care Leavers Grant to help with your accommodation costs in the long (usually summer) vacation. This can be worth up to \u00a3100 a week during the long vacation. Talk to your LEA to see if you can claim.


If you have childcare costs during term time or vacations you may be able to claim a Childcare Grant. The amount you get depends on your income and that of your dependants. Talk to your LEA to see if you can claim.

Student Debt

If you are a student and a lone parent you may be able to claim a Lone Parent Grant to supplement your income. The amount you are awarded is dependent on your income. Talk to your LEA to see if you can claim.


If you have dependant children you may be able to claim a Parents Learning Allowance for extra help with course related costs. The amount you get is dependent on your income and that of your children.


Student loans are paid to students by the Student Loans Company (SLC) for help with living costs while you are at college/university. They are normally paid in three instalments throughout the year. You should apply to your local education authority (LEA). You will need to apply for each year of your course. Twenty-five percent of the loan is based on your income and that of your family. In 2004/05 the loan can also be up to \u00a35,050 for those in London and \u00a34,095 outside London.

For further information on paying back your student
loan see the main section on Student Loans.

This is new for 2004 and is worth up to \u00a31,000 per year. How much you get will depend on your income and that of your household. If your household income is around \u00a315,000 you will receive a grant worth \u00a31,000. Partial grants will also be available for students with a household income of between \u00a315,000 and around \u00a321,000. Grants are payable in three instalments \u2013 one at the start of each term.


This is available through your college to provide extra financial support if you are on a low income and need extra financial support.

Payments will usually be in the form of grants which do not have to be paid back although occasionally payments will be given as short-term loans.

Apply to the student services department of your
college or university.

If you cannot get help through other sources then you may be able to get a Career Development Loan (CDL). A CDL can be used to fund up to two years vocational training or education. CDL\u2019s are bank loans offered in partnership between the Department for Education & Skills (DFES) and three high street banks (Barclays Bank, The Co-operative Bank and The Royal Bank of Scotland).

To find out more see the \u201cFurther
Information & Help\u201d section at the end of this

There are a number of trusts and charities available who may provide financial assistance to students. Many of these relate to students studying a particular subject or having links to a particular geographical area.

If you want to find out about trusts and charities look at the \u201cFurther Information & Help\u201d section at the end of this factsheet.


If you are accepted into a NHS funded degree or diploma course, you are eligible for an NHS bursary. Students in receipt of these bursaries will have their fees paid. These bursaries do not have to be repaid.


The majority of students do not qualify for means tested benefits. If you are a student with a disability or a single parent you may qualify for some benefits. Contact your student welfare department, the Department for Works & Pensions, (DWP) or\ue000

phone us for advice.

If you live in a hall of residence or shared house with only students living there, you will be exempt from paying council tax. If you live with other non-students you may be liable for council tax depending upon your circumstances. Check with your Council Tax Department or\ue000phone us for advice.

Student Debt

Whilst being a student budgeting is one of the most important skills you can use. It may be your first time away from home and the first time you have to be completely responsible for all your own finances.

It is a good idea to work out a budget to include all your income and expenditure while you arestudying. Student welfare advisors will be able to give an estimate of typical costs. The NUS also produce a useful set of leaflets including guidelines for average student expenditure. When working out a budget you should be clear what period the budget covers. Budgets can be worked out monthly or weekly, or you may prefer to do a budget for each term or annually, with a separate budget for the long vacation.\ue000phone us for

advice or contact the NUS directly. Their details are at
the end of the factsheet.

Most of the major banks offer special accounts for students. Things to consider when choosing a bank account are:

The amount of any interest-free overdraft you can
The charges and interest on authorised and
unauthorised overdrafts and loans

How long you can keep using the same account after graduation. Many banks have the option to move to a graduate account with preferential rates instead, while some may insist on you turning your overdraft into a loan.

Warning: check out what the bank will charge if
you go over your overdraft limit. These charges can
often be very high.

Old \u201cMortgage Style\u201d System

Student loans were introduced in 1990 to complement the mandatory LEA grant. These loans are regulated by the Consumer Credit Act and run by the Student Loans Company (SLC).


The interest charged on your loan is linked to the rate of inflation and adjusted in line with the Retail Price Index. Interest is calculated daily at the appropriate rate from the day your loan starts and is added to your account at the end of each month.


The SLC will write to you in the February after graduation advising you when to start making repayments. They will also give you the opportunity to apply to defer repayments. Unless the SLC agrees to defer repayments, they will start collecting repayments from you in the April of that year. Your repayments can be deferred if your gross income (before tax and National Insurance) is below 85% of national average earnings. You must ask for a new deferral each year. If you are late in applying, you may be asked to start making payments.


Repayments are usually made over 5 years by monthly instalments as a direct debit from your bank account. You will have to agree to this when signing the loan agreement. It is therefore important to keep the SLC informed of your current address and to contact them if you change bank accounts. It is also important to inform the SLC if you leave your course. A statement is sent out each year by the SLC showing the level of monthly instalments, the interest rate and the total interest added as well as the current balance. There are options to repay the loan earlier or to make top up payments.


If you do not defer payments and/or a payment is missed for whatever reason the SLC will begin recovery action. The agreement is enforceable by taking you to county court or can be passed to debt collectors first. It is important to contact the SLC as soon as possible if you have missed a payment or forgotten to defer in order to avoid court action. The Student Loans Company does not register defaults or missed payments on your credit reference file but if action is taken through the county court and you receive a county court judgment then this will appear on your credit reference file. See the section on credit reference files or\ue000phone us for advice.


If you are a disabled there are special repayment and deferment arrangements. If you can show as a result of your disability that you will be permanently disabled your loan will be cancelled. If you are a disabled borrower and your income is above the deferment threshold you can extend your repayments over ten years.

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