Can you just get tuition fee loan?

[Puppupandaway]

Hi all. So DS has settled into uni life but we're finding he's hardly using his maintenance loan money (commutes in from family home and is very thrifty). He is due about £6000 over the year and I can see him easily having at least a few thousand left by the summer.

So I'm thinking, would it be possible to just have the tuition fee loan for year 2 and we decline the extra maintenance loan? It will then mean he will be paying off his loan earlier as it will be much less. But I don't know if this is possible. I know we have to apply every year for the student finance, so I'm thinking we might be able to but I can't find this info anywhere.

Anyone had experience of this?

Take a look at this calculator and play around with the figures - especially look at how the amounts change using the “advanced options” filter which allows you to change RPI and how your salary might increase over time, both by inflation and also through promotions, and how much more you will be paying.

https://student-loan-calculator.co.uk/

There are a lot of variables at play. Lots of known unknowns. And the unknown unknowns of how the govt of the future may change the repayment terms.

I’ve seen analysis that predicts approx 85% of current students will pay back all their loans in full. The 40 year horizon makes a big difference versus 30 years.

There are plenty of people in their 20s and 30s on social media complaining about the impact of paying an extra 9% when they have good jobs but are also struggling with housing and childcare costs. 40 years of that is a considerable burden.

Is it possible for parents to pay back £250 a month or more after graduation in the repayment phase? That would be appealing to me as a way of reducing the impact of the interest. Ie it would be artificially like the graduate has a salary of £100k or so if you added together their monthly payments and a parent’s payments. I could afford to do that even though I can’t pay £20k up front

@north51 That calculator is brilliant, thank you. I think it shows that I've done my maths wrong!! I was calculating 4.3% interest every month, but I'm now wondering if it's 4.3% over the year spread out monthly?? I have no real understanding of compound interest!

Yes, you can make extra repayments any time you like. Whether or not this this the best use of your money depends on lots of factors. You don’t have to wait until they graduate either, you could start repaying while they’re still at uni if you can afford it which would be better as less interest will build up.

the interest is the killer really. I went in 2005 and interest was at the rate of inflation, which for most of that period has been very low (1-2%). It’s so unfair that it’s so high now.

last year DS was paying 8%..

My dd didn't claim it in the first year until I saw Martin Lewis say you might as well claim it and invest it unless you are likely to be a higher rate tax payer.
She then claimed it for three years and is now using it as part of her house deposit.

Yes I know. I went under the old scheme which was much better (though I still owe £12k after 16 years of repayments..), my point was it is such high interest now as well as having to borrow so much more, it’s so hard on them. Interest at the rate of inflation seemed much fairer to me.

We’ didn’t bother with the maintenance loan. It is very much a ‘we’ as I am expected to declare all my earnings and make up the difference from the minimum

You only get asked for your financial details if the dependent student ticks the 'I want to claim as much as I can' box (or however it's worded)? If they don't, they will just get the non-means tested amount. If you know that your household income is either above the cut-off, or that even if it's way below, but you are never going to to need the amount of money in a hurry that the student will be able to borrow between the minimum and what would be the loan available according to household income, then there is no need fir the supporting adults to go through the assessment process.

That was interest at the rate of inflation

Oh I see, sorry, in that case mine will also be at 8%. In which case, the new student loan rate isn’t any different to the old one at the moment. (Not sure about this.) Have to confess I haven’t checked mine in a while, i just know the rate went up sharply from 2022 onwards.

Can someone with a better maths brain than me explain how the interest on the loan works?

In year one, if you have the £9250 tuition fee plus £6750 maintenance loan, that'd work out at £16,000 owed before any interest is added. Is it 4.3% of that figure and then you add it on for total owed after the first year or is it more complicated?? It states on the finance website that the interest is charged monthly.... how does that work?

Also, they don't give you the loan all in one go so technically if the interest is charged monthly it won't be an even amount through the year will it??

Thank you to anyone who can explain this to me!!!

It's too complicated for me to work out! But the Gov website says

You’ll be charged interest on your loan from the day we make your first payment to you or to your university or college until it’s been repaid in full or cancelled. We calculate the interest daily and apply it to your balance each month – this is known as ‘compound interest’. The interest rate you’ll be charged depends on which repayment plan you’re on.
The interest rate is based on the Retail Price Index (RPI), which is a measure of inflation.

The tuition fees are paid to the Uni as follows;

Term 1 25%
Term 2 50%
Term 3 100%

I have no idea how much that would make the balance at the end of the first year on £9535 tuition fees. Plus there's the maintenance loan.....