The figures bandied around by the press about how expensive university has become, can be misleading to the point where some people don't bother applying for places, believing them to be too expensive for little reward.
Often you'll see the tabloid headlines stating that graduates are going to be saddled with in excess of £50,000 worth of debt before they've even secured a job, but this is not strictly true.
Dramatic increases in tuition fees
Latest reports suggest that universities across the nation have effectively trebled the cost of tuition fees. This may sound greedy, but it has been a necessity since the government massively reduced the amount of money it invests in higher education. Depending on your choice of course and institution, you should expect to pay somewhere between £6,000 - £9,000 in fees. If your course is part time, the maximum the university can charge for tuition is capped at £6,750.
'No Win, No Fee' Education
The cost of the fees alone can be enough to put anyone off, and that's before you consider the cost of living and how much you're going to need to borrow to sustain you over a three year period or more. Of course you can try and offset some of this with a part-time job, but at the end of the day it's likely that you'll leave uni with a debt. The important thing to remember though, and it might sound counter-intuitive, but the cost of your education will be the amount you have to repay – and NOT the amount you originally borrowed.
So what does this mean exactly? 'No win, no fee' is a term used mainly for personal injury liars, but it is now being coined as a metaphor for student loans. Those who go on from uni to secure well paid jobs will be the ones to repay the most – on the other hand, if you leave university and earn under a certain threshold, your education will have cost you little, if not nothing at all. Of course no one wants to leave university and end up in a job they could have secured without a degree, but this notion that everyone who graduates is lumbered with tens-of-thousands of pounds worth of debt is incorrect.
When do I repay?
As mentioned above, if you earn under a certain threshold, you'll never have to repay your student loan. This threshold is currently set a a respectable £21,000, meaning you can earn a very nice living wage before being saddled with repayments.
If your wages are above this amount, you'll only repay 9% of everything you earn above £21,000! It probably goes without saying that, if you change job or have to take a pay-cut for any reason, the repayments will be adjusted accordingly.
To give you an idea of the figures involved, let's look at a couple of examples:
- Annual salary = £22,000. This is £1,000 above the current threshold. If you earned this for the whole year your total contribution to repayments will be only £90! (9% of £1000)
- Annual Salary = £80,000. This is £59,000 over the threshold and as a result annual repayments would total £5,310
As you can see from the examples, the system really is set up in a way to help students get into further education and is designed in such a way so those who benefit the most financially, also contribute more.