www.le.ac.uk

Student Finance and Budgeting 2012 Onwards

Louise Carr

Student Recruitment OfficerUniversity of Leicester

Student Finance and Budgeting

• Why the changes?

• Financial support available for UK and eligible EU students from 2012/13 onwards

• Impact on families

• Building a budget and managing money

Changes

• Comprehensive Spending Review

• Significant cuts to Higher Education

• Teaching budgets cut by 82% - from £4 billion to £700 million over 4 years

• For some courses, public funding is being removed entirely.

• Tuition fees will vary (£9000 maximum)

Financial Support

Student FinanceEngland

Tuition Fee Loan

Maintenance Loan

Maintenance Grant

Universities

Scholarships National Scholarships

Financial Support - Tuition Fees

• Tuition fee loan

• Will cover the full cost of tuition (up to £9,000 per year)

• Apply through Student Finance England online from March onwards

• Paid from Student Finance England directly to the university

• Nothing to be paid up front

Financial Support - Living costs• Maintenance loan and grant

• Means-tested based on household income

• Paid by Student Finance England to the student

• Influenced by where the student is studying– London– Staying at home– Elsewhere

Financial Support - Living costsHousehold Income Grant Loan TOTAL

£25,000 or less £3,250 £3,875 £7,125

£30,000 £2,341 £4,330 £6,671

£35,000 £1,432 £4,784 £6,216

£40,000 £523 £5,239 £5,762

£45,000 £0 £5,288 £5,288

£50,000 £0 £4,788 £4,788

£55,000 £0 £4,288 £4,288

£60,000 £0 £3,788 £3,788

Over £62,500 £0 £3,575 £3,575

Financial Support -University Bursaries & Scholarships

• Individual schemes for each university

• Money for eligible students direct from universities

• Non-repayable

• Critical for students to research this

Financial Support –University of Leicester

• Chancellor’s Scholarship– £2,000 off tuition fees each year– AAA at A-level or equivalent

• Departmental Scholarship– £1,250 off tuition fees each year– Varying academic criteria

Financial Support –University of Leicester

• National Scholarship Programme– £2,000 off tuition fees and £1,000 cash each

year– Family income below £25K– Other criteria to be developed

Loan Repayments• No repayments until you are earning above

£21,000

• Repayment = 9% of income above £21,000

• New graduates will pay less per month than they would have done under the current system

• All outstanding repayments will be written off after 30 years

• ‘unless you're a higher earner, picking a course with higher fees won't actually cost you more’ Martin Lewis http://www.moneysavingexpert.com/family/student-loans-tuition-fees-changes

Loan Repayments - Examples

Salary Amount above £21,000 Monthly repayment

£21,000 £0 £0

£22,000 £1,000 £7.50

£25,000 £4,000 £30.00

£30,000 £9,000 £67.50

£40,000 £19,000 £142.50

Early repayment is permitted without penalty

Case Study A: Anjali, Leicester• Earning £24,000 • Only starts repayments once

earning over £21,000• Calculated at 9% of anything

over £21,000• 9% of £3,000 = £270• Repayments of £22.50 per month

/ £5.63 per week• Debt cancelled after 30 years

Case Study B: Mark, Leicester

• Earning £16,000 • Only starts repayments once

earning over £21,000• Calculated at 9% of anything

over £21,000• 9% of £0• No repayments• Debt cancelled after 30 years

Repayment - Interest Rates• Interest rates:

Graduate Earnings Proposed Rate of Interest

Below £21,000 pa No real rate of interest applied to loan

Between £21,000 - approx £41,000 Real rate of interest will start to be charged, reaching a maximum of RPI plus 3%

Above £41,000 Repay at the full rate of RPI plus 3%

The impact

on families

Impact on Families - Concerns over Fees• Difficult to see past the cost – parents/carers

worried about the implications of tuition fees

• But… no up-front costs – loan covers full tuition fees

• Repayments only begin once a graduate is earning above £21,000 – they are affordable

• Not a commercial loan (will not damage credit rating)

Impact on Families - Paying up Front?

• Over 3-4 years of study, this could amount to a lump sum up to £36,000

• Could this be invested in something else?

• Speak to financial advisers

Impact on Families - Bank of Mum & Dad™

• Structure of maintenance loans and grants places an expectation on wealthier families to contribute more towards living costs

• Parents/carers don’t need to bankroll 3 years of full living expenses even if they can afford to!

• Parents/carers should feel comfortable for students to take out the loans and to encourage financial responsibility

Impact on Students

• First time receiving a sizeable income in large chunks

• Being responsible for their own money

• Moving away from home and learning about life’s hidden costs

• It is imperative that students learn to budget

Preparing a Budget

Budgeting

Variable Fixed

Budgeting

Will I have enough money…?

• Part time job

• Full time job during the summer

• Parents/family/savings

• Student bank account

• Credit card?

The Big Picture

• Going to university for the right reasons

• Should not be put off by higher fees

• “An investment in your future…”– Not just about getting a degree certificate– Make the most of time at university by

gaining employability skills and making contacts

Summary

• No up-front fees

• Loan repayments are affordable

• Not a commercial loan

• Remembering why students are going to university

• There is help available!

Useful Websites• University of Leicester funding & welfare pages:

– www.le.ac.uk/fees www.le.ac.uk/welfare

• NHS Bursaries: www.nhsbsa.nhs.uk/students• Student Finance England:

www.studentfinance.direct.gov.uk/• Uni Aid (budgeting): http://www.brightsideuniaid.org/• Uni profiles + cost of living info: www.push.co.uk• Martin Lewis:

http://www.moneysavingexpert.com/family/student-loans-tuition-fees-changes

• Careers advice and statistics: www.prospects.ac.uk