Guide to student loans
Congratulations! Your daughter or son is off to university and a new phase of parenting is about to begin. But out of sight (and your house) doesn't mean out of your bank account.
Far from it, in fact, since part of the deal for most parents is that you make a contribution to your child's living expenses while they're studying.
So before you start forking out, you need to know how to access the student loans and bursaries your child is entitled to, using our guide to student finance.
Student loans and bursaries
There are several main sources of financial support available: student maintenance loans, tuition fee loans (both of which come from central government) and bursaries (which come from universities, colleges - and occasionally charities or companies). Here's how they work:
- Loans: have to be repaid after your child has finished their course, got a job and is earning over a certain amount. They will also have to pay interest on the loan, which obviously fluctuates. From September 2012 onwards, graduates earning over £21,000 will pay up to 3% interest plus the rate of inflation.
- There are two types of student loan - the tuition fee loan, which covers the academic fees paid direct to the university or college, and the maintenance loan which is means tested and helps towards the student's living costs, eg for accommodation.
- Bursaries: some colleges offer non-repayable bursaries to students. Make sure your teen asks if there are any academic bursaries or scholarships available for the course they want to study. These might also be offered by charities, companies or professional associations depending on the course your child will be studying. It's worth checking these out and being clued up on the different deadlines and requirements. Some providers offer these to the very best students with a healthy raft of A* grades at A level. And many of them are for disadvantaged students as well, so don't let any mitigating circumstances stop them from applying.
- NHS courses, eg for nursing or medicine, can be government funded.
- Social work courses can also be supported by a government bursary.
How to apply for student finance
Your son or daughter will need to contact Student Finance England, Student Awards Agency for Scotland, Student Finance Wales or Student Finance in Northern Ireland, depending on where you live.
They will then be asked to fill in an online application for whichever sort of support they're requesting - and to provide documentary evidence, by post, of the claim they're making.
Be on hand to help if your teen is floundering, and be prepared for it to be a test of everybody's time and patience.
As a student, your child won't have a lot of money, but it's important to encourage him or her to try to make ends meet with whatever they do have and to live within their means. (Incidentally, it's amusing to witness the switch from pre-student moaning about there being nothing in the house to eat to the paroxysms of delight about the contents of your fridge when they come home during holidays.)
Income for students consists of their loan and (if applicable) scholarship money, plus any other income they earn, eg from a part-time job in term time or a holiday job during vacations.
Encourage your student offspring to start working in their holidays, at least, to save for 'extras' such as holidays - this is an opportunity for them to start thinking about money in the same way as adults and to work out how to balance their budget. And it'll really help them get some vital skills for their CV on the other side of their degree.
Encourage them not to splurge their loan when it first becomes available, but to manage it carefully throughout the term (but be prepared for them to learn the hard way in the first year and to come begging).
And if you haven't already during their teen years, share your thrifty housekeeping tips on how to buy food and household items cheaply, and encourage them to shop around for bargains.
If your child absolutely has to get into debt beyond borrowing from the government, encourage him or her to talk to their bank first and to search online for the best deals available. They should compare the different means of borrowing thoroughly and not allow themselves to be swayed by the freebies that sometimes mask less-than-favourable rates of interest.
Make sure he or she realises what the cheapest ways of borrowing money are and studies the small print before they take out a loan.
It might all seem a far cry from the halcyon days of arguing over pocket money - but if your child learns how to budget and manage money while they're at university, they'll graduate with life skills above and beyond those learned in the library.
Disclaimer: Any content in our family money section is intended as general information only. For specific advice about your personal financial situation, get advice from qualified, independent, regulated professionals.
Last updated: over 1 year ago