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  1. How Does the Budget Affect Me as a Student

    22 Jul 2015
    money student budget


    The recent budget announced by George Osborne included a lot of changes which will affect youngpeople, not least the scrapping of university maintenance grants. The maintenance grant was afundamental part of university finance for many students. It was means-tested, which meant that ifyour parents or guardians earned under a certain amount, you’d get regular payments (usually oncea term) from the government in order to cover rent, food and bills during your time at university.The good thing about the maintenance grant was that – no matter whether you got the full amountor a lesser sum (due to your parent’s earnings) – you did not have to pay it back. The maintenancegrant was just that; a grant. Grants are given out by the government and other organisations for aparticular purpose. In this case, it helped to get those unable to support themselves (or be financiallysupported by their parents) to university.

     
    Maintenance Grant to Maintenance Loan
    The maintenance side of student finance still exists, but it won’t be given as a grant to new studentsfrom September 2016. Instead, it will be added to the student loan, which is to be paid back onceyou have graduated and are earning a certain amount (currently set at £21,000 per year). The tuitionfees for your course are already paid back in this way, and it is thought that the new maintenanceloan will simply tag onto this, meaning that graduates will leave university with more debt.
     
    Think of Your Future
    However, as scary as this sounds, it’s worth thinking about where you intend to be in the future andwhat you really want to do – if you’re simply going to university to be with friends and to have agood time, then you must be prepared to pay back the maintenance and the tuition fees once you’reearning enough. For those who have a set career in mind and who need a degree to continue on towhat they want to do, having this extra amount to pay may involve higher payments, but these arecapped to a certain amount depending on your earnings, and should not become a burden. The loanpayments come out of your pay automatically if you’re salaried (like income tax), so you would never‘see’ the money you’re paying back.
     
    The Truth About Student Loans
    The way that student loans are paid back means that, unless you’re earning a lot of money afteruniversity and beyond, you may not end up paying the full amount back anyway. Student loans havea 30 year lifespan, and after this time any remaining balance is wiped and you will owe nothingmore. Similarly, the loan is also wiped in the event of disability (preventing you from working) or ifyou die, meaning that your family or next of kin will not be expected to pay on your behalf shouldthe worst happen. If you earn enough to start paying back but then drop under the threshold oncemore, the payments to the Student Loans Company will stop – once you start paying it back youdon’t have to continue unless you’re earning enough money. You will not be hounded by debtcollectors or bailiffs for a student loan, and it’s unlikely to be taken into account when applying forcredit in the future. In fact, student loans do not affect your credit file at all, so although you will notbuild up a better credit rating whilst paying back the loan, it also means it shouldn’t prevent youfrom taking more credit in the future.
     
     
    Should I Consider Alternatives?
    Only new students who are starting university from September 2016 will be affected by the newmaintenance loans, so if you’re receiving the maintenance grant now or if you’re starting universitythis September you will not be affected.
    These changes announced in the budget are likely to make many potential students think twicebefore applying to go to university. However, it’s important to remember that you will not have topay anything back until you’re earning a decent wage. If you’re still in two minds, then it may beworth considering other ways you can further your education and career. University is not the be alland end all – there are plenty of other ways to gain employment and skills without having to worryabout student loans. Apprenticeships and on-the-job training are available to many young people allover the UK, so this may be worth looking into if there’s a particular industry you want to get into. Ifyou do decide to go to university, then it’s more important than ever to get the most out of yourdegree. Leaving university with student loan debt is something that millions do every year – and ifyou’ve worked hard and have achieved a good degree from it, then this is almost always worth it.However, if you’ve used your time at university to party a little too much and you haven’t done aswell as you’d hoped, having to pay back student loan debt can feel a bit of a waste, particularly yearsdown the line.
     
    The Future and Beyond
    The future for student loans looks uncertain. It’s very unlikely that the government will changeexisting rules for paying back the loan, but that doesn’t mean it won’t happen. Future governmentscould implement laws which require students to pay back loans and interest much faster, but there’scurrently nothing to suggest this will be implemented, so don’t let the possibility put you off if youhave your heart set on a certain career. Your education is worth more than you may realise, and thepeople you meet at university could go on to be lifelong friends.  The experience of living away fromhome and in getting to learn a new city is worth a lot in itself, so make sure you weigh up all thefactors before letting these budget changes affect your decision to go to university.