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How funding can lower the cost of higher education

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AR011033 09/2017

Thankfully, there are a number of ways in which the costs of higher education can be financed:

Tuition fee loans covering the full cost of tuition fees (£9,250) for UK students studying at UK universities. Loans usually cover the full duration of the course and may also allow a repeat year, but that isn’t always the case. The rules for who is allowed to borrow, how much and for how long are complicated, so make sure you do some homework regarding your own situation rather assuming entitlement.   

Maintenance Loans. These vary from country to country within the UK. For example, Scotland provides loans of £4,750 a year for students who come from a household with income greater than £34,000, but up to £7,625 for students from low-income households. In England, you may get as little as £3,900 if you come from a high-income household and are studying outside London. On the other hand, if you’re from a low-income household and studying away from home in London, the annual maintenance loan could be as much as £11,000.

Grants and awards. Other grants, bursaries and further loans may be available for lone parents, disabled students and those caring for another person. Students studying certain courses such as nursing, social work, dentistry and medicine may also be eligible for extra funding.

Further help. In addition to funding directly from government, here is a range of different bodies that make grants and bursaries available to students.

  • University or college bursaries

  • Some employers may help fund study costs

  • Educational trusts and charities established with the aim of providing financial assistance to students  

  • Army educational grants for those considering a career in the armed forces

The Bank of Mum and Dad. Student maintenance loans vary considerably based upon household income. The more your parents earn, the less the student loan. Implicit in loan award calculations is an expectation that students who have better-off parents should expect some financial support from them.

Saving up in advance. This could be a job for either parents, student, or both. Starting to save as far in advance as possible will make greatest use of the power of compound interest. Saving over a longer period may also allow those savings to be invested in higher risk investments with the potential for higher reward. However, higher risk investments can also go down in value, so they are not a one-way bet. If saving in higher risk investments, remember to de-risk these investments into cash gradually over two or three years in the lead-up to the money being needed to fund fees. If saving over the shorter-term (less than 6-7 years), stick with cash. For mum and dad, an ISA is probably the best home for these savings and for the student; a bank savings account can pay gross interest, without the restrictions of a junior ISA.  

Working whilst studying. Many students work part-time to help fund their studies. Even working one day at the weekend may be enough to cover all of your day-to-day living expenses. The maintenance loan can then be used to partially (or wholly) cover the cost of accommodation. Earning whilst studying also means that when you do eventually graduate, you’ll owe less money.

One word of warning about work; don’t overdo it. You are at college or university primarily to learn, so don’t let a part-time job get in the way of your long-term goals. You will almost certainly find that towards the end of each term and the end of each academic year, you’ll be under greater pressure to study, submit work or take exams. Try to find an understanding employer who will reduce your hours in times of study stress, or opt for a zero-hours contract that lets you work when you want.   

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