Applying for finance- your tips please

[whataboutbob]

DS1 is doing A level exams this week and has just informed us he needs to do his University finance application by Friday. I had no idea. Any tips would be gratefully received, he agreed we are going to do the form together tomorrow.

Think of it as a graduate tax. It hurts less then!

@Cookerhood

Think of it as a graduate tax. It hurts less then!

I don't see how it hurts less when Boomers and Gen X and Y pretty much got away with it. And we thought Gen Y had it bad with the not affording houses because of their love of avocado chiche!

Gen Z have this 'graduate tax' together with ridiculous house prices, no jobs due to covid, and the covid furlough etc bill to pay.

Unless you’re going to be a very high earner. Ignore the interest rates and amount owed.

80%+ will never pay it all back they will only pay 9% of earnings above £26k a year and it’s written off after 30 of years.

Think of it as a graduate tax.

And never pay a lump sum off as you’re just giving the government free Money - unless you’re a very high earner.

Apologies re the rate of of interest confusion. It’s inflation that’s at 1.5% ( according to something I heard on radio 4 earlier this week).

I really don’t know what career DS will go into. He’s aiming to study literature. We’re not very entrepreneurial, DH and I both work in the public sector.

@whataboutbob

I really don’t know what career DS will go into. He’s aiming to study literature. We’re not very entrepreneurial, DH and I both work in the public sector.

Unlikely to really be in that 18% or so that has to pay interest or worry about it or the total debt.

Only need to think 9% over £26k.

It's still 9% of anything over the threshold, whatever you earn. So even if you are sufficiently over the threshold to be a higher rate taxpayer, you still get to keep a good portion of whatever it is over the threshold that you are paid (better than not having been paid it in the first place, anyway).

The threshold for the current tax year is £27,295
www.gov.uk/government/news/student-loans-interest-rates-and-repayment-threshold-announcement

Unfortunately, the threshold for repaying postgraduate loans is lower, though, for those doing a stand alone Masters (the integrated MSci is financed through the undergraduate loan).

The interest rate is a red herring really. It is 9% of salary over £26k or something like that.

So a teacher on £30k a year would pay £4000 x 9% = £360 a year interest. Say their loan amount was £50,000 that is a rate of about 0.75% - much less than a home loan.

If they were my London lawyer daughters on say £100k interest might be 6750 a year instead (which is on a £50k loan an interest rate of 13%).

Or my delivery driver son £22k would have been 0% interest every year for life so loan = gift in someone like his case (had he had a student loan).

I keep a spreadsheet with all my financial information and update it after I receive my P60 each year so the numbers are easily to hand for student finance. Student finance email us to ask for our details so it is worth checking your spam folder, however, our DDs do receive maintenance from them.

As to paying it back, both my DDs have read MSE's advice. DD2 intends to go abroad and not return, at least until 30 years are up. Can't say I blame her.

Can it be repaid early ? In one or several lump sums ?

You can repay early but in practice relatively few ever pay off the full amount.

Iamsodone, it’s worth reading Martin Lewis on his Money Saving Expert pages on why it’s a bad idea to pay off early in one or several lump sums. It makes no sense to pay off something that you might not actually never need to pay off.

I need to get this sorted this evening. If its based on 19/20 income, do I have to include exh. He is not living here anymore (but was in tgat tax year) and wont contribute.

Or can I just base it on my 19/20 income only?

Sorry, another question, can you apply even though you only have a conditional offer? Ie you don't actually know what uni you will be going to until.results day?
Sorry for silly questions, it was all different in my day!

@17bluebirds Each parent that she lives with supplies their own financial details, so your daughter only needs to put you on her application and only you will be asked about your income.
Your daughter puts her firm choice on the application and in the event that she ends up going elsewhere she will need to inform them of her new university/course.

Thanks. We've given up a go. I didn't need to enter any if my details because she inky applied for the tuition fee loan. So it was all really easy

Ditto here, we only applied for tuition fee maybe that’s why we haven’t heard back from Student Loans?

Oh gosh, sorry for my dreadful typing yesterday.

I think you are right, whataboutbob, they won't need your details if it's just the tuition fees, as that is not means tested.

Didn't you also apply for the minimum loan? That's not means tested either.

Yes we went for the minimum. So much to learn right now. On to the accommodation application next!

No, we talked about applying for the minimum loan, but couldn't see the point.

Dd will be living here, I'm paying for all her food etc, just like I always have.

So what would be the point in her getting a loan, with interest, when she doesn't really need it?
If she needs money for books, socialising etc, she can get a part time job.

She'll make the same payments whether she has the maintenance loan or not. But yes, it is a bit different living at home.

Oh, I didn't really think that one through, did I?
Whoops.