Friday 25 August 2017

Finance Fridays – University Costs

We were ticking off our going away home checklist for last week's Finance Fridays. This week we are looking at the costs of going to university. The past two Thursdays have all been about exams. Whether you or your child have just received their exam results there are important decisions to be made. Your exam results may mean you need to think differently about your future now. You may not have been thinking about going to university but a string of good GCSE results could have you thinking about gearing your post-16 education towards going to university. If your A-Level or Higher results have secured you a place at university have you thought through all the costs that you are going to face in the next couple of weeks?

Course fees
– When I did my degree tuition fees were paid by your local council. Since September 1998 universities and other higher education establishments have had to directly ask the student to pay the cost. For 2017/18 these fees in England are capped at a maximum of £9,250 per year and many universities are asking for the maximum amount. If you live in Scotland and you plan to study your first degree at a Scottish university then usually the Scottish Government pay through through the Student Awards Agency Scotland (SAAS). If you are a Welsh student studying in Wales then for 2017/18 you can take out a Tuition Fee Loan of £4,046 to cover one year's fees. The remaining amount of £4,954 can be covered by a non-income assessed Fee Grant. This part does not need to be repaid.

Most universities will have a grace period of a couple weeks if you change your mind about continuing a course and you won't be required to pay any tuition fees. You will need to make sure you complete all the official forms rather than just not turning up any more. After those first few weeks it will depend on the university. Some will have a sliding scale of fees payable whilst others will require you to pay the full 100% if you decide to go home after a month.

Tuition fee funding
– If you need to pay fees most students will apply for a Tuition fee loan rather than paying the full amount straight away. The benefit of a Tuition fee loan over a standard loan is that you won't need to start repayment until you start earning £21,000 per annum. If you never reach this earning amount or if you start paying and then stop working you do not need to make the repayments during this period. After 30 years any debt remaining will be wiped out. With standard loans you would need to start repaying the loan immediately and keep up the repayments. The downside is that the interest rate is currently 6.1% which is much higher than standard loans.

Maintenance loans - For students from England who need funds to cover their living expenses then they can apply for a maintenance loan. The maximum amount you can borrow will depend on whether you are studying in London or another part of the country and also your household income. Essentially for most students it boils down to how much their parents earn. Extra help is available for students from households on low incomes. The repayment of maintenance loans is structured in the same way as Tuition fee loans.

Rent – Housing costs varying across the country so it isn't really very helpful to look at average rents. If you have some particular universities in mind then look at the available housing near the buildings you will be staying at. It might be cheaper to rent something slightly further away but think of the costs of travelling in not just for lectures but also for research purposes.

I lived in halls of residence for all three years of my degree and I loved it. It also provided security and the only other household bill we had to worry about was the electric which we had a prepay key for. In the first year even the electric was included! Living in halls is not for everyone and there aren't enough spaces for every student anyway.

If you go with a private landlord check if they are approved by the university. In the first year the likelihood is that your flatmates will be strangers but together you will be responsible for all of the rent being paid and also for the condition of the house when you leave. If someone else trashes the house and then does a runner you could end up paying for it.

Equipment – If you're moving away from home you'll need at least a basic home kit. This means plates, cutlery, glasses, mugs, pans and other small things such as a tin opener (remember they usually have a bottle opener on top as well!) You could take your existing bedding but remember if you go home for a weekend or for holidays you may need to cart everything home each time which isn't ideal. You'll also be needing your own computer equipment so if you share a laptop or desktop computer at the moment you need to factor that in. Don't be fooled into thinking you don't need books any more as everything is on the internet. Academic books can be very expensive and the university library won't have a copy available for every student to borrow. You may also need to pay subscription fees to some professional and academic sites and software for your studies.

Have you paid your way through university? How did you fund it?

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Finance Fridays

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