Thursday, 20 September 2012

Student FEES - Some useful facts

This is not a sponsored post but I was asked if I was interested and I'm a bit of a Martin Lewis fan so here goes....Thursday (20 Sept) marks Student Finance Day – the day is a focal point for universities, schools and colleges to talk about student finance in England – and dispel some of the myths and misunderstandings out there. The second annual Student Finance Day is run by the Independent Taskforce on Student Finance Information (headed by Martin Lewis of Money Saving Expert).

60% of prospective students have ‘worrying misconception’ about student finance. 

Student Finance Day is launched as new research shows dangerous knowledge gaps. As students face the prospect of £9,000 English tuition fees for the first time, while others visit Open Days for 2013 entry, new research released to mark the second annual Student Finance Day, shows a high level of confusion over the new student finance system remains. Students wrongly worry about repaying when not earning.The research found 63% of English 14-18 year olds and 60% of those starting university in 2012 are worried about how they’ll repay the loan if they are unemployed or a low earner after university – despite attempts to publicise that repayments only come into effect after graduation and provided you earn over £21,000 – and even then it’s proportionate to earnings.The impact of this is that 61% of 14-18 year olds admitted that the changes had made them think harder about whether to go to university, and 91% felt that if they did, they would need to work whilst at university to financially support themselves.  

Head of the Independent Taskforce on Student Finance Information (who co-ordinate Student Finance Day), Martin Lewis of said:“The tragedy is, it’s likely a good chunk of potential students are choosing not to go to university due to misplaced fear.  Worse is, I suspect it’s those from non-traditional university families who are most risk averse and most affected.

“Part of the problem is there’s too much focus on the headline amount being borrowed - a mostly irrelevant figure. What really counts is how much needs repaying and that depends solely on what’s earned after university.  You repay nothing under £21,000 and above that, the more you earn, the more you repay. Financially at least, it is effectively a no-win, no fee system. “Whether you support the changes or not, we must ensure that we don’t damage a generation of students through misunderstandings. That’s why initiatives such as Student Finance Day are so important. Universities, schools, colleges, parents, politicians, and the media all need to come together to ensure we communicate the financial facts – not the fiction.  After all, if young people don’t understand the true cost, how can they make an effective decision?” 

The results of the survey come as universities, schools and colleges across the country join together for Student Finance Day (20 September), hosting events and disseminating information to help prospective students and their parents get clear and accessible information on student finance. For more information on student finance, go to

Here's one of Martin's myth busters on student fees

Ten point mythbuster
  1. You don't pay up front to go to Uni.
First time undergraduate's fees are automatically paid by a Student Loans Company loan. There are also loans of up to £5,500 to live off (£7,675 in London) and those from families with income under £42,611 get living grants of up to £3,354. 

  2.Students don't repay, graduates do, but only if they earn £21,000+. 
You repay 9% of everything earned above £21,000 starting the April after graduation (2017 for most). This £21,000 will rise from 2017. Those who never earn over it, never repay. 

3. Monthly repayments are the same on £6000 or £9000 fee courses.As monthly repayments depend ONLY on earnings, the course fee size doesn't impact it.

4. It’s wiped after 30 years. 
Whatever you still owe, repayments stop after 30 years.

5.There are no debt collectors.
Repayments are taken via the payroll, just like tax. So you never actually handle the cash, meaning there are no debt collectors chasing. 

6.Repayments are £470/year LOWER than before.
Those asking "how can anyone live with such debts?" may be surprised that future graduates will initially have MORE disposable income than today's graduates as they repay above £21,000 earnings (under the old system, it was £15,795). This is also a mild improvement for building a deposit and getting a mortgage in the early years after graduation.

7.You will owe for LONGER and may pay MORE.
The bad news is compared to today's graduates, 2012 starters onwards repay less each year, have much bigger loans and pay higher interest (as much as inflation plus 3%), so it'll take MUCH longer to repay than now and depending on earnings, may cost a lot more.

8.Many will NEVER pay it all back.Even many starting on £25,000 graduate salaries (and rising after) won't repay everything owed within the 30 years (test your situation at'll often be repaying for much of their working life.
9. Many won't pay more on £9,000 courses than £6,000.
As even many £25,000 starters won't repay combined £6,000 tuition fees and living loans before the 30 year wipe, it won't cost them any more to take a £9,000 fee course.
10. Paying up front could be throwing £10,000s away
Fee fears means some parents aim to pay them upfront. For those planning to use savings, remember as many won't repay what they borrowed at today's prices before the 30 year wipe, you could be throwing big money away.  Don’t make knee jerk decisions to pay upfront, without doing research.

Managing money is one thing that everyone should get qualifications in! If you feel you need a bit of help in the finance area please see the links Martin has put together. Let's face it the new fee structure is confusing to all. Knowledge is power!

Martin’s 20 key facts on the new student finance system

Guide for full-time students 

Guide for parents


  1. Thank you for this. My parents and myself were bought up in a no money, no spend way and debt is very alien to me. I still don't like the word debt being used but can see in reality its just a way of doing things. My daughter has more years to think about uni but it already got bought up in conversation at college. Its put my mind more at ease.

  2. Gosh I will probably have to read this twice and then get my shorty to be 18 yr old to read it for me! We skipped a generation on university as in my day it was apprenticeships (hairdressing) but my boy is aiming for Uni in 2014 and I have been seeing these costs as a millstone round his/our necks that makes Uni unattainable/impractical etc etc so your post does do a lot to reassure - thankyou. I love MSE Martin and had read his advice on this subject before but hadn't really taken it all in.

  3. Amanda - I now what you mean about debt and attitude towards it. If I go even penny overdrawn I hate it!. Martin Lewis is great at getting the facts across

    Betty - My 18 year old is at college and therefore no fees at the moment. My daughter isn't interested in uni and would prefer an apprenticeships. Certainly if you go to college to do an HND that would be free ( I think at the moment anyway ) an then you go to uni to top up for 1 or 2 years. Might be cheaper in the long run. I think as a student you need to be certain that your degree will give you good employment prospects