5 questions everyone asks about student loans
Filling out the form for your student loan can seem even more confusing than the exams which are taking you there. Don't get too wound up though - here are five common mistakes answered.
1. I’ve applied for my tuition loan, when do I have to get the money over to my uni?
You don’t. Taking out a tuition loan with the SLC doesn’t involve much ‘taking out’ at all.
As a way to avoid students with wayward tendencies making good on their Vegas dreams, the SLC hand the money over to your university or college directly at the start of each term. You never need to pay anything up front.
2. I think I’m eligible for a maintenance grant. Does this just arrive with my maintenance loan?
If you’re unsure what money you can apply for, make use of the extremely helpful student finance calculator.
Bear in mind that maintenance grants (which needn’t be repaid) don’t come as a lump sum piled on top of the maintenance loan. Split comparably between three terms, for every pound of maintenance grant you’re entitled to receive, 50p is deducted from the total student loan you’re eligible to apply for. This may seem slightly duplicitous (“are they trying to help me or not?”) but it ultimately means you’ll be borrowing less and consequently owing less.
3. I’m worried getting these loans will affect my credit score.
Good news – there is no such thing as a "universal credit score". Despite the term being well embedded in the public consciousness, each lender looks into different things in a borrower’s past and despite your misgivings, there isn’t a leather-bound book out there with unhappy faces scribbled next to your name. With any future borrowing you do need – a mortgage, perhaps – a lender is very unlikely to consider your student loans when they decide if you’re a suitable customer or otherwise.
4. If I take the loan, what will I have to pay back? Is the interest just inflation?
Unfortunately, some well-meaning but misinformed soul reassured everyone they’d only be paying back the loan with interest equal to inflation. And while the loan terms are unrivalled – no bank would offer anything close – during your course you’ll still accumulate interest charged at three per cent above the rate of inflation. The amount of interest you’ll pay once you've graduated is dependent on your income and explained here. It's also definitely worth reading through our repayments guide too.
5. I plan to move out of the UK after graduation. Do I have to pay anything back?
Whether you’re planning to live at the expense of embassies the world over or just hope to survive tip-by-tip behind some tropical bar, a la Tom Cruise in Cocktail, you’ll need to keep in touch with the Student Loans Company by phoning and letting them know your plans. For those staying abroad for longer than three months, there is an Overseas Income Assessment Form, which can be filled out prior to leaving or during your time away. Put simply, leaving the country doesn't invalidate your loan contract and you will have to make repayments.
As Kevin O’Connor, Head of Repayment at the SLC, warns: “Where borrowers move overseas and do not notify the SLC, they may have to pay the costs of any trace agents employed by SLC to obtain a valid address. The SLC will make every effort to trace borrowers who move overseas and fail to notify SLC of their whereabouts or make arrangements to repay their loans. The SLC will consider legal action if necessary to collect outstanding arrears where this is appropriate.”