Student Finance Fax

Understanding student finance can be daunting, and navigating the process often leads to misconceptions. Let’s debunk some common myths about student finance in the UK.

Myth 1: Student Loans are Free Money

This is perhaps the most persistent myth. Student loans are not free money. They are exactly what they sound like: loans. You borrow money from the government (or a private lender) to cover tuition fees and living costs, and you are legally obligated to repay it. The repayment terms are more favorable than commercial loans, but it’s crucial to understand that you will be repaying this debt, with interest, over a significant period.

Myth 2: Everyone Repays the Same Amount

Repayment amounts are tied directly to your income after graduation, not the total amount you borrowed. Repayments begin once you earn above a certain threshold, which varies depending on your repayment plan (determined by when you started your course). If your income stays below the threshold, you won’t make any repayments. Moreover, if you haven’t repaid the loan in full after a set period (typically 30 or 40 years, depending on the plan), the outstanding balance is written off.

Myth 3: Student Loans Ruin Your Credit Score

Student loans from Student Finance England (or equivalent bodies in Scotland, Wales, and Northern Ireland) do not directly impact your credit score in the same way as a credit card or personal loan. They aren’t reported to credit reference agencies. However, consistently defaulting on repayments, if you’re earning above the threshold, could potentially affect your credit rating. Furthermore, if you apply for a mortgage, lenders will consider your outstanding student loan debt as part of their affordability assessment, which might indirectly influence the mortgage amount you can borrow.

Myth 4: Parental Income Doesn’t Matter

While the repayment of your loan is based on your income after graduation, parental income (or household income) often plays a significant role in determining the amount of maintenance loan you receive. The amount of maintenance loan available to you is means-tested, meaning it’s dependent on your household income. Students from lower-income households are eligible for larger maintenance loans to help cover living expenses during their studies.

Myth 5: You Have to Go to University to Succeed

While a university degree can open doors to certain career paths, it’s certainly not the only route to success. Apprenticeships, vocational training, and self-employment are all viable options that can lead to fulfilling and well-compensated careers. The pressure to attend university can sometimes lead individuals into debt they might not need, especially if their skills and interests lie elsewhere. Explore all available options before committing to a university degree and associated debt.

Myth 6: You Can’t Get Funding if You’ve Studied Before

This isn’t always true. While typically, funding is only available for one undergraduate degree, there are exceptions. For instance, you may be eligible for funding for a second degree in specific subjects like medicine, dentistry, or allied health professions, where there’s a skills shortage. You may also be eligible for funding if you had to leave your previous course due to illness or other compelling personal circumstances. Always check the specific eligibility criteria on the Student Finance website.

By understanding these common misconceptions, you can make informed decisions about your education and finances. Always research your options thoroughly and seek professional advice if needed.