Higher studies in the UK is not always easy for a student hailing from a middle-class family background as elite institutions have very high fees. Apart from that, living expenses are also on the higher side as the cost of living is high in urban areas of the country where most of the institutes are situated.
Many educational enthusiasts have to opt for external funding option to fulfil their financial needs. There are several clauses in the student loans which many students are unaware of. This blog will help them comprehend some of these jargons.
There are direct lenders in the UK offering student loans to people from middle and lower-middle-class backgrounds. You won’t have to produce any elder as a guarantor to be eligible for these loans.
The financial assistance from the direct lending institutions brings many other benefits such as instant approval and less paperwork as well as legwork.
Let’s look at some of the nuances of student loans in the UK for a better understanding. Here it goes:
This is a prime component of the fee structure of different colleges and universities in the country, other costs being examination fees, registration charges, supervision fees, library and book charges, etc.
According to the Government’s rules, any university in the UK cannot charge more than £9000-9500 annually. This is the ceiling above which the tuition fees cannot go. This applies to students from the UK and even those flocking to the UK from nearby European countries.
In neighboring Scotland, the universities there charge tuition fees from students residing in England and Northern Ireland.
When you move to a new city where your college or university is, you should live somewhere close to your college or at a distant location where rent is low. The most significant component in the living expenses is rent for the accommodation you stay in.
There are many options of a student paying guests, rented apartments only for students on a sharing basis, etc. The other expenditure is of food, which also holds the lion’s share in the cost of living computation, so you got to account for that as well.
The other expense is purchasing a laptop and internet as we are in a hybrid learning model of online classes. The other miscellaneous expenses in this category are travelling back and forth to your college, buying clothes, social expenses, etc. The living costs are comparative in the country based on where you live, for instance: living in London is expensive than staying in Cardiff or Leicester.
According to a study, London is known to have the maximum average monthly rent for students at £670. This is higher when compared to the country average of £460.
Student loans are offered by several established commercial banks and direct lenders in the UK to finance students’ higher education, be it undergraduate program, post-graduate program, Diploma, and other such degree courses.
Now that you know about the tuition fees and cost of living in different cities, you have a better idea about the loan and what amount needs to be borrowed for your educational course. You need to be eligible for the loan, and the primary eligibility conditions are you need to be an adult with a bank account in one of the UK banks.
Other factors considered by lenders are your age, residential status, existing debt in your family, etc. There are many lenders offering loans for students in the UK who agree to lend a specific percentage of your tuition fees in some cases.
Student loans are categorized into two categories, namely maintenance loans and tuition fee loans. The latter category covers the tuition fees of the course you are enrolling for. The lender directly transfers it to the institute.
The part-time course is also eligible for student loans wherein the lender finances a tuition fee of £7000. Likewise, this amount is more for accelerated rapid courses, which are pursued by working professionals. On the flip side, the maintenance loans are transferred by the lender to your bank account, and it varies from the location of your stay.
For instance: If you’re studying from home, you will be eligible to receive a lesser amount, and if you’re living in London, you will get comparatively a larger amount. The final loan amount sanctioned also depends on certain factors like your household income, the credibility of the institution you are enrolling for, etc.
The application process, while applying for a loan application from a direct lender, is usually completed online. It takes 5-7 weeks on average to process a student loan application, but this duration also depends on the borrower’s profile and papers.
Direct lenders take less time than established commercial banks, as paperwork and credit checks are strict in the latter case. A good part is that a student does not necessarily have an offer letter signifying confirmation from a college or a pre-decided accommodation place before applying for a student loan.
There are several online portals on which you can apply for a student loan in the UK. There is a provision to calculate the monthly installment on these portals by entering the loan amount and applicable interest rate along with the loan’s tenor. It will give you a better picture of the actual cash outflow that will happen once the repayment starts.
The best part about taking a loan from any direct lenders online is that you can sit with the lender and negotiate the loan’s interest rate along with the repayment terms and conditions.
You don’t have to start repayment while you are studying, the actual repayment begins once you graduate, and the moratorium period (as applicable) ends. Some lenders agree to start the repayment cycle once you start earning and are in a permanent job. Also, there is no penalty if you wish to foreclose the loan before the pre-determined tenor or want to make a lump sum payment at any point during the tenor.