Are you a new student or going to start your degree in September or October this year? You must know that the tuition fee is very high and a hike is expected next September. You may have to pay a tuition fee of up to £9,250 along with living costs and accommodation fees. In order to meet these expenses, you may need a student loan. These loans can help you overcome the financial struggle and continue your studies. Different types of student loan such as undergraduate, subsidized, unsubsidized and parent plus are available and you can select one according to your requirements. Before applying for a student loan you must understand what is a student loan, its application process and repayment terms.
Here is a complete guide for you to understand everything about student loans.
What Is a Student Loan?
A student loan is a type of loan that helps students in paying for post-secondary education expenses such as books, tuition fee and living costs. This loan is different from the other loans as it offers low-interest-rate and flexible repayment options to facilitate students. In the UK student loans are usually provided by state-owned student loan companies. The interest rate on the loan amount begins to accumulate from the time a student takes out a loan but repayment starts in the next year after completion of students education. Depending on the area of the UK a student loan is cancelled automatically after a certain age usually 30 years. Always keep in mind that you may have to pay extra if you leave your course so it is better to ask for advice from experts before dropping out.
Who Can Apply For Student Loan?
The eligibility criteria are based on several factors such as your residence and the place where you study. Student loans are open to UK nationals who are living in the UK for the last three years. Student finance bodies require you to live in the same part of the UK where the finance body is located through which you are applying. For example, if you are applying to finance body Wales you should live in Wales. You can also apply if you are from the Republic of Ireland or have refugee status. Moreover, you need to be studying a valid course from an approved university, and taking this course for the first time. Before applying for a loan you must ask your finance body to give you a full list of rules and regulations.
When Should You Apply For Student Loan?
You can apply for a student loan even if you have not selected the university place yet. The application date varies depending on the city in which your university is located. If you want to get your funding from the start of the term, you must apply for the loan within the due date. However, if you have not applied for a loan in time, you can still apply for up to 9 months after the start date of your course. In case of a late application, you may need to wait a few more weeks to get funding.
How To Apply?
You can apply online or by post for a student loan. In both ways, you have to send necessary information and documents with application forms such as your passport or birth certificate, your course and university information. It can take up to six weeks to process a student loan application so you should apply for a loan in May if your university is going to start in mid of August. Four main student finance bodies are providing student finance in the UK. You just need to go to the website of the finance body of your region, fill the application form and complete the paperwork. You can also track your application to check payment dates and make changes to your details.
What Is The Interest Rate On Student Loan?
Interest rate is added to the amount you borrow. During your studies, the interest is charged the same as the rate of a retail price index (RPI) in that year plus 3% more. After the completion of your degree, you have to pay interest on what you owe. The interest rate increases in proportion to your earnings. However, if your income is less than the income threshold you do not need to repay until your income is high. In this case, the interest is added to your debt.
When Do You Have To Repay?
You do not need to start repaying your loan and interest until your income is at least £15,00o per year. The repayment will start in April after you have completed your course. If you become unemployed the repayment will stop until you are back over the earnings. You can carry on the monthly payments until you repay all the amount or the loan gets cancelled.
Now that you know the details about student loans it will become easier for you to make a decision whether you should apply for it or not.