STUDENT FINANCE: The best way to beat those breadline blues?
Paul Gosling reports on the benefits of the student loan scheme
Thursday 05 October 1995
Even though a student loan will create a burden that is likely to take years to repay it is still better than the alternatives. Part-time work, which may be necessary anyway, can lead to fatigue and lack of time for study, leading to a loss in standards, say academics. Many students, report the National Union of Students, are even being pushed by financial crises to abandon their degree courses.
But borrowing from the still state-owned Students Loans Company has been no easy matter, with application forms delayed and lost by the company. Until now, each year of its operation has seen large numbers of applicants waiting months for their payments to come through. But the company says there are no delays this year, with previous administrative problems all resolved.
The amount available to borrow from the Students Loan Company depends on three factors: does the student live at home, are they studying in London, and is it the final year of study.
The basic loan available each year to a student, if living away from the parental home, is pounds 1,385. But in the final year it is less, just pounds 1,010, because the summer period no longer receives support. If the student is living in London the figure is pounds 1,695, or pounds 1,240 in the last year of a course.
Those students who live at the family home are entitled to borrow pounds 1,065 a year, or pounds 780 in the final year. The loans have been increased by about 20 per cent compared with last year, and, with grants going down by 10 per cent, represent a further shift from grant support to loans. Loans are available to university and other higher education students who are studying for a first degree, a postgraduate certificate of education, a diploma of higher education, a higher national diploma, or some other selected qualifications. You must also have a bank or building society account into which the loan can be paid.
The loans are not means-tested, but a limited rate of interest is payable, equal to the current rate of inflation. This is calculated from the date the student's bank account is credited with the loan. With such a low rate of interest, it is sensible to borrow from the Students Loan Company even if a student does not think they initially need the money. Provided, that is, they can discipline themselves to invest it rather than spend it.
Some 40 per cent of students do not take up their opportunity of borrowing student loans. Their motivation may be that they do not want the albatross of debt hanging round their necks for future years. While this is understandable, this particular debt is less of a worry than some others.
Louise Clark, press officer for the National Union of Students, said: "Most students go for interest free loans from banks. We would advise students not to go to loan sharks or similar. It is very dangerous to borrow on credit cards or store cards, which work out very expensive."
A loan from the Student Loans Company only becomes repayable when the student has entered the workforce and earns 85 per cent of the national average wage - the current threshold is pounds 15,204 per year. The loan must then be paid off in five years, unless monthly earnings drop below pounds 1,268. (Graduates with disabilities do not have their state benefits included in their income for the purposes of deciding when they should begin to repay their loans.)
More than two in three graduate starting salaries are less than this threshold. As a result, few students who have borrowed from the company have actually repaid their loans - though the company says it is unable to report how much has been repaid.
There is a Student Loans Ombudsman for people who wish to complain about the company, but only about one complaint a year has actually been lodged.
The Student Loan Company can be contacted on 0800 405010, with forms available at colleges and universities.
The Student Loans Ombudsman can be contacted on the same number.
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Germany sees 'visible rise' in support for far-right extremism in response to perceived 'Islamisation' of the West
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
£25000 - £40000 per annum: Recruitment Genius: Join a fast growing software co...
£20k + Benefits: Guru Careers: We are seeking a Graduate / Digital Account Exe...
£18k: Guru Careers: We are seeking a Junior Designer / Design Graduate to join...
Negotiable: Recruitment Genius: A Key Sales Account Manager/Graduate Trainee i...