There are lots of myths surrounding finance at university, the majority of which are not true. Read on to find out if you'll be repaying your loan for the rest of your life or if you can escape repayments by fleeing the country.
Only rich people can afford university
Student Finance gives all students the opportunity to go to university regardless of their background. All students can get a tuition fee loan to cover tuition fees. People from lower income backgrounds are often eligible for means tested bursaries and grants awarded by the university.
Repayments begin the moment you graduate
Repayments begin the April AFTER you’ve graduated but only if you’re earning over £25,725. If your grad job salary is £22,000 you won’t begin paying it back until you’re earning £25,725+.
Student loans impact your mortgage applications
Whilst student loans don't impact your credit score they can slightly influence your mortgage applications. Banks may take your monthly student loan repayments into account when undertaking affordability checks to see if you can afford to keep up with repayments.
You’ll be repaying your loan for the rest of your life.
If you haven’t paid your loan off after 30 years the debt is wiped. You only begin to pay back the loan the April after you graduate for 30 years. If you’re not earning over £25,725 you do not have to make repayments, if you were earning £27,000 one year and £25,000 another year you would only pay it back in the £40,000 year.
If you don’t keep up with payments Bailiffs will be at your door
After you begin working the loan repayment is automatically deducted from your salary before you get it so you automatically pay your loan back and you don’t have a choice. If you’re self-employed and you fail to pay your loan back to HMRC then the Student Loan Company will chase you.
You should repay your entire loan as soon as you can
If you win the lottery/save up money there is the option to pay off your student loan completely. By doing this you won’t have to pay as much interest, but it’s unlikely you’d pay back the full amount before 30 years is up. This also applies if your parents/you would like to pay your student loan upfront – there’s no guarantee that you’ll end up making over the threshold or even repaying the entire amount.
If you move abroad you don’t have to pay back your loan
A common myth surrounding repayments is that you don’t have to pay back your loan by moving abroad. This is incorrect. If you’re working abroad for longer than 3 months you have to notify the Student Loan Company and set up arrangements for repayments.
The loan is interest free
As the student loan is in fact a loan interest will incur on your balance that will need to be paid back. This is factored into your monthly repayments.
Your loan will cover everything
The tuition fee loan will cover your tuition fees, but maintenance loans may cover your expenses. Maintenance loans are calculated based on parental income and there’s the assumption that your parents will help financially support you at university. Often students find that their maintenance loan doesn’t fully cover the expenses and they have to get a part time job to cover the rest. If you are estranged from your parents charities like Stand Alone offer information and support for funding university.
Student Finance is only for Undergraduates
Masters degree students can get a loan of £10,906 a year, this can go towards tuition fees or living expenses. The average cost of a UK masters is £7,392 so it’s very likely Masters students have to work alongside their degree/use savings for their cost of living. The loan amount is not calculated based on your income/your parents. Loans are also available for Doctorate Degrees.