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Debt Advice - Student - Debt
Debt Advice - Student - Debt
STUDENT DEBT
S SOURCES OF FINANCIAL
HELP
loan, DSA assistance does not have to be
repaid. Talk to your LEA to see if you can
claim.
O TUITION FEES
Student Debt
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Apply to the student services department of your
LONE PARENTS GRANT
college or university.
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• The interest charged on your loan is linked to the
EXPENSES WHILST YOU ARE rate of inflation and adjusted in line with the Retail
STUDYING Price Index. Interest is calculated daily at the
appropriate rate from the day your loan starts and
Whilst being a student budgeting is one of the most is added to your account at the end of each month.
important skills you can use. It may be your first time
away from home and the first time you have to be • The SLC will write to you in the February after
completely responsible for all your own finances. graduation advising you when to start making
repayments. They will also give you the
It is a good idea to work out a budget to include all opportunity to apply to defer repayments. Unless
your income and expenditure while you are studying. the SLC agrees to defer repayments, they will start
Student welfare advisors will be able to give an collecting repayments from you in the April of that
estimate of typical costs. The NUS also produce a year. Your repayments can be deferred if your
useful set of leaflets including guidelines for average gross income (before tax and National Insurance)
student expenditure. When working out a budget you is below 85% of national average earnings. You
should be clear what period the budget covers. Budgets must ask for a new deferral each year. If you are
can be worked out monthly or weekly, or you may late in applying, you may be asked to start making
prefer to do a budget for each term or annually, with a payments.
separate budget for the long vacation. phone us for
advice or contact the NUS directly. Their details are at • Repayments are usually made over 5 years by
the end of the factsheet. 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
CHOOSING A BANK ACCOUNT – important to keep the SLC informed of your
THINGS TO CONSIDER 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
Most of the major banks offer special accounts for
out each year by the SLC showing the level of
students. Things to consider when choosing a bank
monthly instalments, the interest rate and the total
account are:
interest added as well as the current balance. There
• The amount of any interest-free overdraft you can are options to repay the loan earlier or to make top
have up payments.
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work liability for the loan will be cancelled.
STUDENT LOANS
New “Income-Contingent” Loans • From April 2005 the starting point at which former
students begin to repay their loans will increase
• These were introduced in September 1998 to from £10,000 to £15,000. This will apply to all
replace the mortgage style loans. The amount of students with income contingent loans including
the loan you will receive depends on your year of those currently in repayment. You will not have to
study, the type of course and the location of your start making any repayments on your loan until
college/university. If you started your course on you are earning over £15,000 a year. This means
the mortgage style loan you are likely to continue that after April 2005 someone earning £20,000
on the old system. Income Contingent loans are will pay just £8.65 per week no matter what they
not regulated by the Consumer Credit Act. owe, against £17.31 per week under the current
scheme.
• Interest is linked to the rate of inflation and
accrues daily from the date you receive your first DEBTS TO UNIVERSITY/COLLEGE
loan instalment.
• Repayments start from the April after you graduate You may owe money to your educational
or leave your course if your gross income exceeds establishment for a variety of reasons. Debts may
the income threshold. The income threshold is include accommodation, rent, tuition fees, hardship
£15,000 or £1,250 per month or £288 per week. loans or library fines. The consequences for non-
The amount that you pay is 9% of the difference payment vary depending on the type of debt. Different
between your income and the income threshold. colleges/universities may have different policies on
how they will treat the debts depending on the
circumstances.
EXAMPLE
Many universities/colleges will consider withholding
SALARY = £17,000 per annum
qualifications or prevent you going on to further
studies if you owe money to the university. These
THRESHOLD = £15,000
policies could be considered unfair if the money is not
owed for fees. You may want to dispute this if you are
DIFFERENCE = £2,000
unable to come to a repayment arrangement you are
happy with. Student welfare officers should be the
9% OF £2,000 = 9/100 X 2,000 = £180
first point of contact. Phone us if you need
further advice.
The amount to repay is £180 per annum or £15
per month.
ACCOMMODATION
• Your repayments will usually be collected by the
Inland Revenue via your employer through the Pay Most universities/colleges provide some kind of
As You Earn system (PAYE). If you are self accommodation for students. The tenancy is often
employed you will repay the Inland Revenue only for one academic year excluding the summer
through self-assessment tax returns. vacation. This payment should be treated as a priority.
Many universities/colleges may be reluctant to evict
• If you are outside the UK tax system you will have you for non-payment but they may refuse to offer you
to repay the SLC directly. accommodation in later years.
• Repayments will not be over a fixed period as the This means that you need to make an arrangement to
level of your repayments will rise or fall directly in pay back any outstanding debts at a rate you can afford
line with your income. This means that the length to avoid this happening.
of time over which the loan will be repaid will
depend on your income after graduation and on the
total amount you borrowed. TUITION FEES
• Disability benefits are not counted as income when If the Local Education Authority (LEA) assess that
assessing your threshold income. In some you need to make a contribution towards your tuition
circumstances, if you are permanently unfit for fees and you do not pay then the debt you owe will be
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a debt to the university and not the LEA. Difficulties your utility supplier with up-to-date meter readings
often occur when the LEA assessment is delayed or if whenever you move into or leave a property.
you leave the course or transfer to another
university/college. If tuition fees are owed to your If you have a utility bill you cannot pay you should
university or college you may not be allowed to contact your supplier straight away to see if you can
progress to your next year of study or your degree come to an arrangement.
certificate could be withheld if you are in your final
year phone us for advice. You should treat gas and electric debts as a priority
debt as your supplier can install a pre-payment meter
or disconnect your supply if you do not pay. You
CREDIT DEBTS cannot be cut off if you fall behind with water bills
although your water company can take court action
Credit debts can include bank loans, overdrafts, credit against you if you do not keep up with your payments.
cards etc. If you are still a student you may have Phone us for advice.
access to an interest free overdraft. You may be able to
negotiate extending the overdraft with the bank or
make an arrangement to pay back the overdraft once
CREDIT REFERENCE FILES
you have graduated. If you have other credit debts
The majority of creditors have structured repayment
which are not specifically student related you may
arrangements for student related debt once you start
have to come to an arrangement to pay what you can
earning. As long as the arrangement is kept to there
afford. We suggest you use our information pack
should not be a problem with your credit rating. If you
“Dealing with your Debts” to work out a personal
have credit agreements that are not specific to students
budget and make offers to your creditors.
i.e. credit cards or store cards, then defaulting on these
agreements will affect your credit rating and ability to
If you have a student account, contact the Account
obtain credit in the future. We have a factsheet on
Manager at your bank, your Student Welfare Officer or
credit reference agencies we can send you or phone
phone us for advice.
us for advice.
Until recently you could include your student loans in Department for Education & Skills (Dfes)
bankruptcy along with your other debts. The law has Tel: 0870 000 2288
recently changed so that from 1 September 2004 www.dfes.gov.uk
(Income Contingent Loans – post 1998) or 1 July 2004 At College/University
(Mortgage Style Loans 1990-1998) student loans are Most colleges/universities have student welfare
no longer provable in bankruptcy. This means they are officers that can provide you with up-to-date
not written off with your other debts at the end of the information and advice about any financial issues
bankruptcy. whilst you are a student.
If you now choose bankruptcy as an option for dealing Local Education Authority (LEA)
with your credit debts you will not be able to include You may be able to get financial assistance towards
your student loans in the bankruptcy. You will still your tuition fees (and in some cases other assistance)
have to pay back your student loans in the usual way. from your LEA. You need to apply to the LEA where
you live prior to starting your course.
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461 Holloway Road Council for International Education
London 7-17 St Albans Place
N7 6LJ London
Tel 0871 221 8221 N1 1NX
www.nusonline.co.uk Tel: 020 7288 4330
www.ukcosa.org.uk
NHS Students
The NHS Student Grants Unit Education Grants Advisory Service (EGAS)
22 Plymouth Road The Educational Grants Advisory Service is an
Blackpool independent advice agency for people who want to get
FY3 7JS funding for further or higher education. It is mainly
Tel: 01253 655 655 concerned with helping students who are not eligible
www.nhscareers.nhs.uk for statutory funding. To apply you must first send a
Trainee Teachers stamped addressed envelope to:
Training And Development Agency For Schools
Teaching Information Line 0845 6000 991 EGAS
Welsh Teaching Information Line 0845 6000 992 501-505 Kingsland Road
www.tda.gov.uk Dalston
London
The National Bureau for Students with Disabilities E8 4AU
(SKILL) Information Line: Tel: 020 7254 6251
Chapter House www.egas-online.org
18-20 Crucifix Lane
London Career Development Loans
SE1 3JW Career Development Loan Information Line
Tel: 020 7450 0620 Tel: 0800 585 505
Fax 020 7450 0650 www.lifelonglearning.co.uk
Information Service: 0800 328 5050
Minicom: 0800 068 2422 OTHER USEFUL WEBSITES
Email skill@skill org.uk
www.skill.org.uk Funderfinder
www.funderfinder.org.uk
Scholarship Search
www.scholarship-search.org.uk
REMEMBER: You can always contact us for advice about any difficulty you have in
dealing with your debts.
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