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From £1,000 to £25,000
Rates from 5.7% to 278%
3-36 month repayment
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Rates from 278% to 1576%
3-12 month repayment
Representative example: £500 borrowed for 5 months. Total amount repayable is £991.85 in 5 monthly instalments of £198.37. Interest charged is £491.85, interest rate 236.1% pa (variable). Representative 481.6% APR.
How Student Loans in the UK Work and the Available Options
Before you take out a student loan to finance your educational needs, it would be best to know what the loan actually is, what the available options are, and particularly on how it works. After all, you want to know what you’re signing up for once you agree to take on the financial product. It’s also important to know whether or not you can pay back your loan and keep up with the responsibility of entering a credit agreement.
Interest Rate for Student Loans
Interest on student loans is charged on day one when you receive the loan amount up until you have completely paid back the entire balance. Students from England and Whale, whose college courses started from the 1st of September in 2012 have varied interest rates if they take out a student loan from companies backed by the Government and it will depend on their situations:
- During the duration of your schooling and up until the month of April after you graduate from your course, you will need to pay a Representative Interest Rate and an additional 3% (3.9% for 2015/16).
- If you enrolled on a short course or finished your entire course earlier and should have come into repayment before April 2016 then you’ll pay RPI plus 3% (3.9% for 2015/16) until the April after you leave your course, then RPI (0.9%) only until April 2016.
In times of economic hardships, payments for student loans including its interest rates can temporarily cease although it might not be true in all types of student loans outside those provided by the Government. If it’s a private loan, then this condition will depend entirely on the lender. There are those that grant temporary payment relief in times of financial troubles while there are those that do not.
When you will start paying back your student loans
Generally, you will need to start repaying your Government backed student loan including its attached interest rates after you have completed your course and earnt some form of income. However, there is a specific amount of earnings that you need to enjoy to become eligible for payment. The amount will vary from the place where you completed your schooling.
Students from England or Wales whose courses started from 1 September 2012 and forward will start paying back their student loan once they begin earning over £21,000. Graduates from Scotland, Northern Ireland or those who studied before 2012 from England and Wales, meanwhile, will start repaying when they earn over £17, 335. Many private student loans, however, require payments while you are still in school.
Student loans and the available Financing Options in the UK
Student loans are designed to finance university and college studies and higher education as well. If you are completing your studies in the UK, there are several different student loans available from both private and government-backed companies. These financial products can help you cover your tuition fees for your course and living costs.
The type of loan that you can get will vary depending on the course you choose, your present household income and your personal circumstances. Some of the available options that you can look into in the UK today include:
- Loans for first time students – If you have enrolled for an undergraduate study for the first time, you can apply for a government-backed loan and enjoy fewer interest rates and flexible payment terms that won’t become a big burden to your future finances.
- Private Student Loans – If you are taking a second degree or want to pursue postgraduate studies, you will have to deal with the costs of schooling yourself. With that being said, there are numerous student loans from private companies available in the UK if you want to borrow money for higher education.
- Student bank account with 0% overdraft – With 0% overdrafts, a student can borrow money free of charge while he is still studying.
- Student Credit Cards – A student can avail for a credit card and use it to cover different costs such as books and tuition fees. However, any student should be cautious that they don’t rely heavily on credit cards.
- Grants, scholarships, and other funding – There are plenty of grants and scholarships that students can enjoy from the government and the college or university in which they are studying. There are, however, certain qualifications that you need to meet such as having poor income and/or possessing certain unique talent or proficiency in schooling.
- Postgraduate funding – Students who wish to pursue post-graduate studies can apply for funding to cover their tuition through government research councils and other academic funding institutions.
You can take out any of the said student loan options in the UK depending on your needs and present circumstances as well your qualifications. There are also a number of private student loan companies that you can find online who provide emergency short-term loan funding to students who find themselves in urgent need of financing.
Student Loans from private companies
If you intend to pursue a post-graduate education or if you are studying at a private college, you will have to pay for all the costs associated with your degree yourself. Now if the money left in your savings account is simply not enough to cover all the necessary costs for schooling, there are a few borrowing options that you can consider from private companies. Just make sure, however, that you can comfortably afford the monthly payments of your loan especially if you intend to study full time and your income and monthly earnings drop significantly.
Personal Student loans
Personal student loans are unsecured which means you don’t need to offer any form of collateral to secure them. They are, however, tied heavily to your credit score and enjoying the best rates and maximum amounts are normally reserved for borrowers with healthy credit reports. And if you don’t have any credit history, taking out a personal loan can also prove challenging.
The best thing about personal loans though is that you can use them for any purpose you see fit. Government-backed loans are used strictly for tuition fees and cost of living which means that if you intend to take out a loan to purchase a new car that you can use to drive yourself to and from your school, then personal loans would be the ideal options.
What if I can’t keep up my repayments?
If you can’t keep up with your repayments you must contact your moneylender immediately and advise your struggling with the monthly installments some companies will adjust your monthly installments to reflect what you can afford to pay back on a monthly basis please note that this can also extend your term of the agreement and probably the amount of interest that you end up paying back. You’re never advised to just stop paying your agreement as this may result in interest being charged on the agreement and missed payments showing on your file this could make obtaining further down the line a lot more difficult.
What do i do next?
Next is the fun bit you need to click on the apply button and fill out our simple online form designed to make sure the whole application as smooth and pain free as possible. The whole application process from start to finished shouldnt take you longer that 3 minutes its as simple as you can get.
*Subject to lender approval and requirements.