THE UK INSOLVENCY HELPLINE

STUDENT DEBT

The amount you will get will depend on

INTRODUCTION
F According to recent figures the average
your income and that of your family unless
you are classed as an “independent
student”. If you are an independent
graduate debt has risen by over £4,000 student and you have a partner their
A since 2003 to £12,180. Debt levels vary
considerably depending on the length of
income will be assessed.

your course, where you are studying and

C the level of financial support received. As
student grants have now been abolished
DISABLED STUDENTS
ALLOWANCES (DSA)
and charges are made for tuition fees,
T many students now reply on student loans
as their main source of income. They are
If you are a student with disabilities you
may be eligible for a Disabled Students
also increasingly relying in various forms Allowance which can help with costs you
of credit in order to survive an average incur, in attending your course. These are
three year course. available to full-time and part-time
students with disabilities. Unlike a student

S SOURCES OF FINANCIAL
HELP
loan, DSA assistance does not have to be
repaid. Talk to your LEA to see if you can
claim.

H The information below gives a brief

summary of the sources of financial help
CARE LEAVERS GRANT

E available. More detailed information can

be obtained from the Local Education
Authority (LEA), Department for
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
E Education and Skills (DFES) or National
Union of Students (NUS).
the long (usually summer) vacation. This
can be worth up to £100 a week during the
long vacation. Talk to your LEA to see if
T You may have to pay a contribution
towards your tuition fees. For 2004/05,
the most you will have to pay towards your
you can claim.

fees is £1,550. Phone us for advice. CHILDCARE GRANT

LOCAL EDUCATION If you have childcare costs during term

N AUTHORITY (LEA) time or vacations you may be able to claim

a Childcare Grant. The amount you get
depends on your income and that of your

O TUITION FEES

You may be able to get help from your

dependants. Talk to your LEA to see if you
can claim.

LEA towards your tuition fees by applying

30 to the LEA where you live prior to starting

your course.

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

If you are a student and a lone parent you may be able

to claim a Lone Parent Grant to supplement your CAREER DEVELOPMENT LOANS
income. The amount you are awarded is dependent on
your income. Talk to your LEA to see if you can If you cannot get help through other sources then you
claim. 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’s are bank loans offered in
PARENTS LEARNING ALLOWANCE partnership between the Department for Education &
Skills (DFES) and three high street banks (Barclays
If you have dependant children you may be able to Bank, The Co-operative Bank and The Royal Bank of
claim a Parents Learning Allowance for extra help Scotland). To find out more see the “Further
with course related costs. The amount you get is Information & Help” section at the end of this
dependent on your income and that of your children. factsheet.

STUDENT LOANS TRUSTS & CHARITIES

Student loans are paid to students by the Student There are a number of trusts and charities available
Loans Company (SLC) for help with living costs while who may provide financial assistance to students.
you are at college/university. They are normally paid Many of these relate to students studying a particular
in three instalments throughout the year. You should subject or having links to a particular geographical
apply to your local education authority (LEA). You area.
will need to apply for each year of your course. If you want to find out about trusts and charities look
Twenty-five percent of the loan is based on your at the “Further Information & Help” section at the end
income and that of your family. In 2004/05 the loan of this factsheet.
can also be up to £5,050 for those in London and
£4,095 outside London.
NHS BURSARIES
For further information on paying back your student
loan see the main section on Student Loans. If you are accepted into a NHS funded degree or
diploma course, you are eligible for an NHS bursary.
HIGHER EDUCATION GRANT Students in receipt of these bursaries will have their
fees paid. These bursaries do not have to be repaid.

This is new for 2004 and is worth up to £1,000 per

year. How much you get will depend on your income BENEFITS
and that of your household. If your household income
is around £15,000 you will receive a grant worth The majority of students do not qualify for means
£1,000. Partial grants will also be available for tested benefits. If you are a student with a disability or
students with a household income of between £15,000 a single parent you may qualify for some benefits.
and around £21,000. Grants are payable in three Contact your student welfare department, the
instalments – one at the start of each term. Department for Works & Pensions, (DWP) or 
phone us for advice.
HELP AVAILABLE FROM COLLEGE
COUNCIL TAX
ACCESS TO LEARNING FUND
If you live in a hall of residence or shared house with
This is available through your college to provide extra only students living there, you will be exempt from
financial support if you are on a low income and need paying council tax. If you live with other non-students
extra financial support. you may be liable for council tax depending upon your
circumstances. Check with your Council Tax
Payments will usually be in the form of grants which Department or  phone us for advice.
do not have to be paid back although occasionally
payments will be given as short-term loans.

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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.

• If you do not defer payments and/or a payment is

• The charges and interest on authorised and
missed for whatever reason the SLC will begin
unauthorised overdrafts and loans
recovery action. The agreement is enforceable by
• How long you can keep using the same account taking you to county court or can be passed to debt
after graduation. Many banks have the option to collectors first. It is important to contact the SLC
move to a graduate account with preferential rates as soon as possible if you have missed a payment
instead, while some may insist on you turning your or forgotten to defer in order to avoid court action.
overdraft into a loan. The Student Loans Company does not register
defaults or missed payments on your credit
Warning: check out what the bank will charge if reference file but if action is taken through the
you go over your overdraft limit. These charges can county court and you receive a county court
often be very high. judgment then this will appear on your credit
reference file. See the section on credit reference
files or  phone us for advice.
STUDENT LOANS
Old “Mortgage Style” System • 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
• Student loans were introduced in 1990 to
permanently disabled your loan will be cancelled.
complement the mandatory LEA grant. These
If you are a disabled borrower and your income is
loans are regulated by the Consumer Credit Act
above the deferment threshold you can extend
and run by the Student Loans Company (SLC).
your repayments over ten years.

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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.

STUDENT LOANS & BANKRUPTCY FURTHER INFORMATION & HELP

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.

UTILITY DEBTS Student Loans Company (SLC)

Student Loans Company Ltd
Many students have problems with utility debts 100 Bothwell Street
especially if you share bills with other students in a Glasgow
shared house. To avoid these problems it is a good idea G2 7JD
to ask for the bill to be put in joint names so that each Tel 0800 40 50 10
person named on the bill is jointly responsible. You www.slc.co.uk
should also be careful only to pay for the fuel used and
not fuel used by previous or future tenants. Contact National Union of Students (NUS)
Nelson Mandela House

Student Debt
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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

Support for Learning

www.support4learning.co.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.

Freephone: 0800 074 6918

Website: www.insolvencyhelpline.org
© Copyright Money Advice Trust (updated October 2005)

Whilst we endeavour to keep our factsheets as up to date as possible, The UK Insolvency

Helpline cannot be held responsible for changes in legislation or for developments in
case law since this edition of the factsheet was issued.

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