Student Finance: It pays to be prepared

Finance is central to student life, so you need to get it right.
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The Independent Online

When a student is setting about the process of getting a university place, he or she is confronted by an alarming number of administrative issues to deal with. Not only that, but the focus of their keenest attention is more likely to be on those aspects of their first major life-change that are instinctively more important to them; finding out more about their course and life at their new place of study. They can be forgiven for thinking that routine matters such as fixing up finance for their study are the kind of thing that just slots easily into place and can be left until after all the other important things have been attended to. Many people, as a consequence, leave the whole thing a bit longer than they should.

You should start applying for your student finance as soon as possible, usually during the February of the year in which funding will be required for the start of the autumn term.

The time-honoured method of paying student maintenance loans at the start of each term (and any grants to which people are entitled) was based on the expectation that these are the points in the year when a student's main expenses will occur, such as paying rent for a hall of residence and buying books.

But it is quite usual for people to move off-campus into private term-time accommodation in the second or third year and be faced with the prospect of monthly rental. Budgeting for these known requirements is essential and many people, looking back on their time at university or college, realise what a valuable experience it has been for life after university to be forced into a regime of managing your personal finance. Working out a weekly budget so that you know in advance what you will have to spend on food, travel, rent, study expenses and social life is an absolute must.

Help and guidance are always available at school for those unsure of what lies ahead. While at university, students can get excellent financial advice from the National Association of Student Money Advisers (NASMA) and the Student Loans Company (SLC) can always help those who need advice after leaving university.

The fact that students don't have to waste any of their time worrying about the repayment of their loan can only be a good thing - that and the fact that it is the cheapest form of finance they will ever have access to. But the day does dawn when that obligation has to be faced. Most people are aware that they have a "repayment holiday" between their last day of study and the beginning of April the year after. There is also an earnings threshold, whereby you won't have to start repaying until you are earning £15,000 per year. You only make repayments when you can afford to, in other words.

HM Revenue & Customs will deduct 9 per cent of any earnings above the £15,000 per annum rate, but will deduct nothing if the monthly or weekly pay falls below the threshold. This makes the repayment system remarkably simple for the person with the student loan. There are still people repaying the old-style loan which was phased out in 1998 and they are fully responsible for ensuring that they keep up payments (usually by direct debit) but may apply for annual deferment if their earnings fall below the threshold for that loan.

For everyone on the current loan scheme who has entered repayment status, it is always advisable to check each pay slip to ensure the right amount has been deducted, or that no deduction has been made, and keep all pay slips.

The collection system is dependent on the UK tax system, whereby employers are obliged to file an annual report of deductions, meaning the information on a person's loan repayments will not be collected until the end of the tax year. Keeping pay slips and tracking deductions is the best way of knowing what is outstanding.

People who think they will have fully repaid in a few months' time should contact the SLC, if they haven't already sent a letter to inform the borrower that they are about to finish repaying. The SLC will help calculate the remainder, and at the appropriate time, will notify HM Revenue & Customs to stop deducting loan repayments. If anyone ends up overpaying, there is always a final reconciliation where overpayments are fully refunded, which is good to know!

Ian McLaren Thomson is a press officer at the Student Loans Company. For more information visit and