Parents caught in the dash for a degree

John Andrew considers an early effect of the Dearing proposals on student finance

Tens of thousands of parents are sharing in their children's anxieties this week as the countdown to A-level results determines whether a place at university is on the cards this autumn or if another year's wait is necessary after all.

The sense of urgency is, if anything, greater this year following the report of the Dearing committee, which has recommended that all students should pay up to pounds 1,000 each towards their tuition fees.

Although the measure is virtually certain to be means-tested, its likely imposition in the 1998-99 academic year is expected to lead to a mass of deadline-beating university applications from A-level students who suddenly decide they want to go to college this year after all.

If they are successful, their parents will find themselves filling in last-minute grant application forms from their local education authority (LEA).

Roughly a third of students receive a full grant, a third nothing at all and the remainder are paid something towards their living costs. Grants are means-tested on both the student's and parents' income. A student's income from holiday or term jobs is excluded. However, unearned income over pounds 1,810 received in the financial year that the course is started reduces the grant on a pounds l-for-pounds l basis. Therefore in the majority of cases it is the parents' income which primarily determines the level of grant.

The assessment is on the parents' residual income in the financial year preceding the commencement of the course. That is their gross income from all sources, plus the value which the Inland Revenue place on benefits in kind such as company cars, less interest payments and contributions to life policies and pension plans, providing they qualify for tax relief.

In cases where parents are divorced, the assessment is on the income of the person with whom the student is living. The parents' contribution to their offspring is worked out on a sliding scale (see table). If there are other dependent children in the family, this contribution is reduced by pounds 75 for each child.

Students living away from home and studying in the provinces whose parents have a residual income just above pounds 33,000 will normally receive no grant.

The figure rises to just over pounds 36,000 for students studying in London and falls to just below pounds 30,500 for students who live at home, regardless of where they study. It can still be worthwhile for parents whose income is near those levels to apply for a grant as the basic payments (see table) are based on an academic year of 30 weeks and three days (25 weeks and three days for Oxbridge and Cambridge).

Extra weeks' attendance results in an additional payment of pounds 79.80 or, pounds 59.80 a week according to whether the student is studying in London or the provinces. Those living at home, regardless of their place of study, have an additional pounds 41.90 a week.

Three forms have to be completed and submitted to your LEA to obtain the award for a higher education course. The first, the application form, is to ascertain if you are entitled to an award. Basically it covers residency requirements. The second, the grant assessment form, is used to see if the LEA is required to pay anything towards a student's living. The final one, the college acceptance form, has to be completed by the college when the offer of a place becomes unconditional. That is usually after A-level results are known. An LEA will not pay tuition fees unless it receives that form.

Parents who are confident that their income is at a level which will result in no grant being forthcoming for living expenses need not complete the LEA's lengthy grant assessment form. However, they must complete and submit the application and college acceptance forms to ensure payment of tuition fees.

Grants are not the only basic source of student finance - there are also student loans, for which recipients may feel increasingly grateful. They are not means-tested, but like grants, the amount of the loan depends on where the student lives and studies. As the loans are intended to help to finance students through the summer vacations between academic years, loans for students in their final year are about 25 per cent less than those available in the previous years of a course.

Just as parents are not compelled to pay any contribution towards their offspring's living costs, taking a loan is not compulsory. Nor does the maximum amount have to be taken. But if a lesser sum is applied for it is not possible to elect to take the remainder at a later date. However, the scheme does allow for the loan to be paid at the beginning of each term.

Although the loans are interest-free, the amount borrowed increases with the rate of inflation. The amount lent is adjusted each year in line with the Retail Prices Index (RPI). Repayments begin in the April after the end of the course.

Repayments are monthly, normally over a five-year period. However, that period could be extended in the future if the annual loan is increased. Students who earn less than 85 per cent of average national earnings (currently pounds 15,792 per annum) may defer repaying their loan for up to a year at a timen

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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