Students - what the grant changes mean for you

George Osborne has now abolished maintenance grants for students on low income backgrounds. These were funds totalling £3bn that used to be set aside to help poorer students through university, which have now been abolished and replaced with larger maintenance loans.

Here's a quick guide (mainly for reassurance purposes) explaining how the changes will affect you.

Who isn't affected?

  • Students already at university

If you’re already at university you will be unaffected by the changes announced yesterday. If you are receiving a grant this will continue as normal for the duration of your course.

  • Scottish students

If you're Scottish, these changes don't apply to you. You will continue to be able to apply for grants from the Student Awards Agency Scotland (SAAS) if you are from a low-income background, and from the Student Loans Company for your maintenance loan.

Who is affected?

Students considering going to university, who will begin their university course in or after the 2016/17 academic year, who are from England or Wales.

Who might be affected?

Northern Ireland have not yet made a decision about whether maintenance grants will be scrapped. We will update this page when we know their decision.

The changes

Maintenance grants scrapped

If you aren’t at university yet and are considering going, the major change is that you can no longer get a maintenance grant. Maintenance grants were amounts of money awarded to students from low-income backgrounds (if your parents' combined income was less thank 25K), in order to cover part of their living costs whilst they are at university. The idea behind them was that whilst students from richer backgrounds could borrow or be given money by their parents, the government would pay living costs of students from poorer backgrounds in order to ensure they could access education the same as everyone else. The government has completely scrapped these maintenance grants as of yesterday.

However, you will be able to apply for an increased maintenance loan to cover your costs at university.

Maintenance loans increased for students with low-income background

A maintenance loan is money the government will lend you to cover your cost of living whilst you are at university which you will pay back to the government after your course has ended and you are earning over £21,000. Instead you will be able to apply for a larger maintenance loan, which you will pay back once you are earning over £21,000.

How much you get will depend on household income (in most cases the income of your parents). Any student that comes from a household that earns less than £25,000 will be able to claim for the maximum maintenance loan available:

  • If you plan to live at home at university you will receive £6,904 per year towards your living costs.
  • If you are living away whilst you study, but will be living outside of London you will receive £8,200 per year towards your living costs.
  • If you are living away from home and are studying in London you will receive £10,702 per year towards your living costs.

Loans for students not from low-income backgrounds will also be increased, though the government is yet to confirm exactly what this amount will be.

How will you pay your loan back?

As before, you will only pay back your loan (tuition and maintenance) once you are earning over £21,000, no matter how much you received. This will be paid at a rate of 9% of all your earnings above and beyond £21,000.

If your annual wage is £25,000, for instance, you will pay 9% on the last £4,000. In this example you would pay £360 over the year, or £30 a month.

If after 30 years if you still haven't repaid your loan it will be written-off by the Government.

A word of re-assurance

The headlines are bad. Student grants have been axed. That’s £3bn which used to go to supporting the poorest students through university, who will now not receive that money.

If you are considering university and are from a poorer background, don’t be put off. You will only pay this money back once you earn above £21,000. It’s unlikely you’ll repay the full amount as well, unless you become extremely rich upon leaving university, which means that you can afford it. It's estimated that six out of ten graduates will have their debt written off after 30 years, so these loans, though not ideal in comparaison to grants, are not something that should put you off attending university.

University will still increase your earning potential and over your working life you will likely earn a lot more money (even taking your debt into account) than if you don't go to university.

If you have any questions feel free to email we will endeavor to answer them, or leave your question in the comment field below. Need more reassurance? Check out 5 reasons you should stop worrying about money...