Student Loans

A student loan is a sum of money paid to you in a number of instalments

Any individual under the age of 50 is eligible for a student loan.

Student loans may look very large. But they are the cheapest loans available by far. They only grow at the rate of inflation. This is currently 2% per annum. The interest on a student loan has a 1% above base rate cap, so even if the inflation takes off you are safe.

To apply for a loan but you must contact your Local Education Authority (LEA), your university or apply online through the Department for Education and Skills.

Local Education Authority

University List

Department of Education and Skills

Maximum loan amounts for the period 2002/2003 were as follows:

 - £3,905 for students living away from home 
- £3,090 for students living at home 
- £4,815 for students living in London and away from home.

The exact amount of your loan is determined on your family’s income, where you live, what you’ll be studying, disabilities, which year you are in and the length of your study. But all students no matter circumstances are eligible to receive 75% of the maximum allowance.
You’ll receive three instalments of your loan. The first will be in the form of a cheque that you can pick up at your school and the following two will be paid directly into your bank account. If your application is received by the LEA late your instalments can be reduced to two or even one instalment.
You’ll start paying your loan after you graduate and have an income of £15000 per annum of more. You may repay your loan before the set time if able.

When you have an income of £15000 or more, your employer will automatically deduct your payments to HM revenue from your wages via PAYE or Self assessment. If you are abroad and therefore outside the UK tax system you need to provide the SLC with evidence of your income if it is over £15000 you can repay your loan directly to SLC (Student Loan Company).

Interest is a fee charged to the lender for borrowing money. The SLC adds interest to the total amount of your student loan every year you have an outstanding balance. The current interest rate for a student loan is 3.1% but is subject to change along with the country’s inflation.