UCAS Workshop 3 Student Finance. UCAS Workshop 3 – Student Finance As a result of this week’s Budget, student finance is changing. HOWEVER, the financial

UCAS Workshop 3Student Finance

UCAS Workshop 3 – Student Finance

As a result of this week’s Budget, student finance is changing.

HOWEVER, the financial landscape is not as bleak as the headlines suggest.

The impact will be more psychological than practical.

Most importantly, this should not deter you from going to university.


How will the changes affect you?

Currently, full-time students can tap into three streams of funding to help cover the costs of university:

1. Tuition fee loan (available to all)2. Maintenance loan (35% means tested)3. Maintenance grant (fully means tested)

Option 3 is being withdrawn.



Under the Chancellor’s changes, the maintenance grant is being replaced with larger loans for full-time students with effect from September 2016.

The amount that new students receive will depend on their household income.



ONLY those with a household income of £25,000 or under will be entitled to the maximum amounts:

Status Max. amountLiving at home £6,904Living away from home £8,200Living in London £10,702Year abroad tbc


What if my parents’ income exceeds £25,000?

The Treasury has not yet confirmed the size of the loans that those households earning more will be entitled to. However, the entitlement is likely to be set on a sliding scale against household income.

As soon as this information is released, we will communicate it to students and parents.

The tuition fee loan will still be available to everybody, irrespective of income.


What will the long-term impact be on debt repayment?

As with the current loans system, students will only have to start repaying their maintenance loans when their earnings exceed £21,000 per year.

In practical terms, this will make little difference. With maintenance loans, you only repay 9% of everything you earn above £21,000 over thirty years.



The withdrawal of the grant means that students will only pay more if they were already going to be repaying in full within the 30 years anyway.

You would need to earn roughly over £30,000 for it to make a difference.



The key impact of this is psychological, particularly for those from non-traditional university backgrounds who tend to be risk-averse, as the idea of a much bigger loan runs the risk of putting them off going to university.


Is the repayment threshold likely to change?

The government announced this week that it will consult in the summer on freezing the repayment threshold for five years.

The worst case scenario is that you will only have to start repaying your loan if you earn over £21,000 from April 2020, i.e. nearly a year after graduation from a three-year course. (For a four-year course, you will start repaying in April 2021.)

If the threshold rises in line with wages (which is likely), then youwill be spared repayment for at least a year.


What do graduates typically earn?

Degree Professional job Non-professional jobDentistry £30,681 -Chemical Engineering £28,992 £16,481Medicine £28,871 -General Engineering £27,280 £17,639Mechanical Engineering £26,197 £15,774Economics £26,146 £17,343Veterinary Medicine £26,045 £18,467



Degree Professional job Non-professional jobAeronautical Engineering £25,061 £15,882Materials Technology £24,870 £16,840Physics and/or Astronomy £24,504 £14,990Mathematics £24,437 £15,980Electrical Engineering £24,390 £14,700Librarianship £24,038 £15,900Civil Engineering £23,947 £17,486



Degree Professional job Non-professional jobGeology £23,766 £14,320Social Work £23,217 £14,580Computer Science £23,144 £15,649MFL (Russian & E Eur) £22,880 £17,340Nursing £22,524 £15,417Building £22,341 £15,167Business & Management £21,993 £16,107



Degree Professional job Non-professional jobAccounting & Finance £21,821 £16,496Politics £21,665 £15,304Physiotherapy £21,538 £14,209Chemistry £21,187 £14,472Teaching £21,176 £14,095History £20,779 £14,620Geography / Environment £20,284 £14,456



Degree Professional job Non-professional jobMFL (Western European) £19,904 £16,102Marketing £19,777 £15,860Pharmacy £19,747 £14,243Biological Sciences £19,569 £14,415Law £19,246 £15,386Psychology £19,050 £14,282Sports Science £18,564 £13,994



Degree Professional job Non-professional jobEnglish £18,065 £14,428Archaeology £18,030 £14,651Art & Design £17,934 £13,881Architecture £17,797 £14,076Media Studies £17,669 £14,313Drama / Dance £17,280 £14,090Music £16,458 £13,945


How will I be able to afford university?1. The trebling of tuition fees in 2012 does NOT mean a trebling of costs.

Those who earn a lot will repay a lot.

Those who don't gain too much financially from going to university will repay little or nothing.

The vast majority of students still gain by going to university when lifetime earnings are taken into consideration.


How will I be able to afford university?2. You do NOT need to pay fees up front.

It is NOT a case of ‘pay up or you can’t go’. Once your application has been processed, tuition fees are automatically paid by the Student Loan Company. Full-time students only need to start repaying this in the April AFTER graduation (or leaving) at the earliest, no matter how long your course is.

For many students, paying tuition fees up front rather than taking the loan leaves them tens of thousands of pounds worse off.


How will I be able to afford university?3. Earn under £21,000 per year and you will NEVER repay.

You only repay 9% of everything you earn annually above £21,000 of pre-tax salary once you've left university. Therefore if you've started repaying the loan, but then lose your job or take a pay cut, your repayments drop accordingly.

If you earn £22,000 per year, you repay £90 per year (9% of £1,000)

If you earn £31,000 per year, you repay £900 per year (9% of £10,000)


How will I be able to afford university?4. Student loans will NEVER involve debt collectors.

Student loans are repaid through the payroll just like income tax. What this means is that once you’re working, your employer will deduct the repayments from your salary before you receive it. So the amount you receive in your pay packet each month already has your loan repayment removed.

This means no debt collectors will come chasing as you don't have a choice in the matter and will have paid it automatically.


How will I be able to afford university?5. After 30 years, any remaining debt is written off.

You stop owing when you've cleared the debt or when 30 years (from the April after graduation) have passed, whichever comes first. If you never get a job earning over the threshold, you'll never repay.


How will I be able to afford university?6. Student loans do NOT go on credit files.

When you borrow from a bank or apply for a credit card, loan or mortgage, to evaluate whether they'll make money from you, lenders look at three pieces of information – your application form, any previous dealings they’ve had with you and crucially, the information on your credit reference files.


How will I be able to afford university?6. Student loans do NOT go on credit files.

Most normal financial transactions and credit relationships you have are listed on these files – but student loans are NOT included.

So the only way loan, credit card or mortgage providers know if you’ve taken out a student loan is if they choose to ask on application forms. This is only likely to happen for a mortgage application.


How will I be able to afford university?7. Student loans do NOT always work against mortgage applications.

Any student loans you have will be taken into account when a mortgage provider runs an affordability check on your application.

Student loans may mean that you have a lower take-home income, meaning that you will be assessed as being able to make smaller repayments.


How will I be able to afford university?7. Student loans do NOT always work against mortgage applications.

HOWEVER…

You will be considered lower risk than somebody who started university before 2012, as they repay 9% of all earnings over £16,910, whereas you will repay 9% of all earnings over £21,000 (according to current figures).

Having a substantial house deposit will be the dealbreaker in anymortgage application. The student loan will be far more negligible.


How will I be able to afford university?8. The very highest earners are NOT the highest repayers of debt.

A quirk in the student loan repayment system means that seriously high earners pay off so quickly they have less time to accrue interest.

This doesn't mean they pay nothing; they still pay far more than very low earners, but it does mean that extremely high earners repay less than high earners.


How will I be able to afford university?9. Think of it as a graduate tax, NOT a loan.

The maximum possible loan, as things stand, combining tuition fees and maintenance from 2016 onwards, is £17,200 per year (outside London), or £51,600 over a three year course.

HOWEVER…


How will I be able to afford university?9. Think of it as a graduate tax, NOT a loan.

• It is repaid through the income tax system• You only repay it if you earn over a certain amount• The amount repaid increases with earnings• It does not go on credit files• Debt collectors will not chase for it• Bigger borrowing doesn't increase repayments


Are universities likely to raise their fees above £9,000 per year?Probably.

The Chancellor’s Budget announced that those universities which could show ‘good teaching quality’ would be allowed to raise their fees by the level of inflation from the academic year 2017-18.

There is no qualification yet as to what ‘good quality’ means, but it will probably be dependent upon a university’s REF rating.


Are universities likely to raise their fees above £9,000 per year?Probably.

This will affect you from your second year of university (or your first if you intend to defer entry to September 2017).

This increase in tuition fees is only likely to apply to Russell Group universities.


Will university still be worth it?Almost certainly – YES!

In 2014, graduates earned £160,000 more on average than non-graduates over their working life.

As this lifetime earnings figure is also set to rise, it will remain the case that a university degree is a worthwhile financial investment.

Documents

UCAS Workshop 3 Student Finance. UCAS Workshop 3 – Student Finance As a result of this week’s Budget, student finance is changing. HOWEVER, the financial