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Student finance myth buster


Theme – Debt and Costs

Q - I’m already in debt from my first year at university. The additional charge for tuition means I won’t be able to complete my degree.

A – The increase in the cost of tuition does not apply to existing students. It only applies to students entering higher education for the first time in September 2012 or later. 

Q – I’m an existing student - do the changes affect my repayments?

A - The current £15,000 earnings threshold remains but it will be uprated annually in line with inflation from April 2012. 

Q – I’m a graduate - do the changes affect my repayments?

A  - If you are currently repaying a loan your repayment threshold will rise in line with inflation from April 2012.

Q - The changes to higher education funding mean I can no longer afford to go to university

A – It’s important to remember that the cost of tuition does not have to be paid up front. You only start to repay your tuition loan when you are earning more than £21,000. Support – in the form of loans or grants - is also available to help cover living costs. This means that under the new arrangements, most full-time students should have the same amount of financial support available as current students. And students from lower income families will get more non-repayable maintenance grant support to help towards living costs than they do now.

Q - I’m worried that I’m going to be saddled with a lifetime of debt as a result of the changes

A – A graduate earning £25,000 per year would repay their loan at a rate of £6.92 per week. If earnings fall, then the repayments will fall as well. Graduates won’t have to pay back anything until they are earning more than £21,000 a year.
The £21,000 earning threshold will be uprated annually in line with earnings from April 2016.
Any outstanding payments will be written off after 30 years. If you are in lower paid work or unpaid work (which may include time bringing up a family) you won’t be asked to make a contribution. 

Q - There’s no point in getting saddled with debt, there are no graduate jobs in the first place!

A - The current jobs market is a tough one. Having a degree improves a person’s chance of getting a job and they will earn more than non-graduates in years to come. Research shows that graduates are more likely to be in a job than those with lower qualifications.
On average, a university graduate earns £100,000 more during his or her lifetime – net of tax – than someone who leaves school at 18.

Q - Paying back higher fees means I’ll never get a footing on the property ladder

A - The Council for Mortgage Lenders advise that a student loan is very unlikely to affect your ability to get a mortgage. Mortgage lenders usually take account of your monthly net income. Under the new scheme, graduates will have a higher monthly income because the increase in the repayment threshold means that they will be making lower monthly repayments on their student loans.  

Q - I start university in September 2011 and I’m confused about what I will have to pay

A - Students starting courses in 2011 will pay £3,375 per year. The new charges and repayment arrangements only apply to new students from September 2012.


Theme – Quality of Education

Q - We’re paying more, but we’re getting nothing in return

A - We believe our reforms will make the experience of going to university better as it puts power in the hands of the student. In the future student choices will shape higher education. So, it will be in every university’s interest to persuade prospective students that its teaching arrangements , facilities and undergraduate support are worth investment. Universities will have to provide more information about contact time, for example, and about the jobs that their graduates go on to. 

Q - I’m worried the course/university I want is going to be axed because only the most popular choices will survive

A - Students will decide which courses are offered because universities will need to respond to demand – where there are courses that attract students they will run. There is already a very diverse choice of courses and there is no reason why students will not continue to seek a range of courses.


Theme – Part Time Students

Q - I’m considering doing a part-time degree, but a friend doing a full-time course has told me it isn’t worthwhile. Is that true?

A – Eligible part time students who start their degree from September 2012 will have access to loans for tuition costs and will not have to pay upfront, so long as it’s their first degree and they are studying for at least 25% of their time.
More part-time students will get support under the new system.


Theme - Support for poorer students

Q - You’re encouraging a class-based education system, with universities out of reach for students from poorer communities

A - Many students from poorer households will be better off under the new system, with additional support available through grants and loans. The National Scholarship Programme also aims to encourage more bright students from poorer communities go to university.  

Student protests

David Willetts addresses some of the issues raised by student protestors and explains the reality of the student finance proposals.