Student loans and grants in the United Kingdom are primarily provided by the government through the Student Loans Company (SLC), a non-departmental public body. The Student Loans Company is itself divided into Student Finance England, Student Finance Wales and Student Finance NI. The Student Awards Agency for Scotland assesses applications in Scotland. Most undergraduate university students resident in the United Kingdom are eligible for student loans. In addition, some students on teacher training courses may also apply for loans.
The logo of the Student Loans CompanyThe Student Loans Company (SLC) was founded for the 1990/91 academic year to provide students with additional help towards living costs in the form of low-interest loans. In its first year, the SLC gave loans to 180,200 students[1] This represented a take up rate of 28% of eligible students, with an average loan of £390.
In late 2009, the Student Loans Company was heavily criticized by universities and students for delaying in processing applications. It is being further criticized in 2010, as previous issues do not seem to have been sorted out. Such issues can include the loss of financial evidence multiple times, refusal to admit that an applicant exists, sending schedules for entirely incorrect universities and in some cases years,[6] and failing to keep applicants informed at all. The Chief Executive, on a salary in the range £390,000 - £394,999, resigned in May 2010.[7][8]
Students from low-income households may apply for their loan to be increased. For the 2009/2010 academic year, students living at home were entitled to an extra £1,075 (bringing the total loan to £3,838); students living in London were entitled to an extra £1,940 (bringing the total loan to £6,928); and students living elsewhere in the UK were entitled to an extra £1,386 (bringing the total loan to £4,950). The precise threshold for qualifying as a low-income household varies depending on which country of the UK the student resides in, and is set between two bands, with very poor students receiving the full extra money and less-poor students receiving only a partial extra amount.[11]
Universities themselves are legally obliged to give a non-repayable bursary to students in receipt of a full maintenance grant.[13]
All loans from 1998/9 onwards are repaid under the Income-Contingent Repayment (ICR) scheme.[14] This involves the loans being repaid directly out of the student's wages, at a rate of 9% for everything earned above £15,000 in that tax year.[15] Repayments continue until either the loan is paid off, the payments have been continuing for 25 years, or the student turns 65
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[edit] History
[edit] Education Act 1962
In the years following World War II, most Local Education Authorities (LEAs) paid students' tuition fees and also provided a maintenance grant to help with living costs; this did not have to be repaid. The Education Act 1962 made it a legal obligation for all LEAs to give full time university students a maintenance grant.[edit] Creation of the Student Loans Company
[edit] Introduction of tuition fees
In 1997, a report by Sir Ron Dearing recommended that students should contribute to the costs of university education. The Labour government under Tony Blair passed the Teaching and Higher Education Act 1998 which introduced tuition fees of £1,000 to start in the 1998/9 academic year.[2] In addition, maintenance grants were replaced with repayable student loans for all but the poorest students. The total loans provided by the Student Loans Company increased from £941 million in the 1997/8 academic year, to £1.23 billion in the next year, when tuition fees took effect.[1][edit] Tuition fees in Scotland and Wales
In January 2000, the Scottish government, which consisted of a coalition between Labour and the Liberal Democrats, decided to abolish tuition fees for Scottish students studying at Scottish universities.[3] In a similar vein, the Welsh government gives Welsh students studying at Welsh universities a tuition fee grant, reducing the amount owed.[4][edit] Higher Education Act 2004
The Higher Education Act 2004 increased tuition fees from £1,000 to £3,000. By the 2005/6 academic year, the Student Loans Company was providing £2.79 billion in loans to 1,080,000 students.[1][edit] Recent history
The Student Loans Company currently employs 1,894 people in the two Glasgow offices and at sites in Darlington and Colwyn Bay, Wales.[5]In late 2009, the Student Loans Company was heavily criticized by universities and students for delaying in processing applications. It is being further criticized in 2010, as previous issues do not seem to have been sorted out. Such issues can include the loss of financial evidence multiple times, refusal to admit that an applicant exists, sending schedules for entirely incorrect universities and in some cases years,[6] and failing to keep applicants informed at all. The Chief Executive, on a salary in the range £390,000 - £394,999, resigned in May 2010.[7][8]
[edit] Eligibility
Students must meet two eligibility requirements: personal eligibility and course/institution eligibility. Personal eligibility principally concerns the student's residency status. To achieve course/institution eligibility, the student must be studying for an undergraduate degree at a UK degree-awarding institution or other verified higher education establishment. In addition, students on some teacher, youth and community worker courses are also eligible for Student Loans Company support.[9][edit] Tuition fee loan
All full-time students are entitled to a tuition fee loan which covers the full cost of the tuition fee. For the 2009/10 academic year, universities are entitled to charge up to £3,225, except in Scotland where the students do not pay for tuition. In the 2010/2011 academic year, the tuition fee will increase to £3,290.[10][edit] Maintenance loan
All eligible students are also entitled to a maintenance loan, which is designed to help pay for living costs whilst at university. All students are entitled to a set amount, with those living at home entitled to less and those living at universities in London entitled to more. For the 2009/2010 academic year, the maintenance loan was set at £2,763 for students living at home; £4,998 for students living in London; and £3,564 for students living at universities elsewhere in the UK.[11]Students from low-income households may apply for their loan to be increased. For the 2009/2010 academic year, students living at home were entitled to an extra £1,075 (bringing the total loan to £3,838); students living in London were entitled to an extra £1,940 (bringing the total loan to £6,928); and students living elsewhere in the UK were entitled to an extra £1,386 (bringing the total loan to £4,950). The precise threshold for qualifying as a low-income household varies depending on which country of the UK the student resides in, and is set between two bands, with very poor students receiving the full extra money and less-poor students receiving only a partial extra amount.[11]
[edit] Maintenance grant
As well as being entitled to an increased loan, students from low-income households are also entitled to a maintenance grant, which does not have to be repaid. Like the extra maintenance loan, the precise threshold for qualifying as a low-income household varies depending on which country of the UK the student resides in, and is set between two bands, with very poor students receiving the full grant and less-poor students receiving only a partial grant.[12] For the 2009/2010 academic year, students from England and Wales were entitled to a grant of up to £2,906; students from Scotland £2,105; and students from Northern Ireland £3,406.[11][edit] Other grants
The Student Loans Company provides other grants, such as the Special Support Grant which is available for students on benefits.[12] However, the tuition fee loan, maintenance loan and maintenance grant are by far the most common assistance that the Student Loans Company provides.Universities themselves are legally obliged to give a non-repayable bursary to students in receipt of a full maintenance grant.[13]
[edit] Repayment
Prior to the 1998/9 academic year, repayment was made using a 'mortgage-style' system of 60 monthly installments which began when the student was earning over a certain threshold (£27,050 for the 2009/2010 financial year).[14][15] This system was criticized because no matter what the size of the loan, it had to be repaid within the 60 monthly installments.[15]All loans from 1998/9 onwards are repaid under the Income-Contingent Repayment (ICR) scheme.[14] This involves the loans being repaid directly out of the student's wages, at a rate of 9% for everything earned above £15,000 in that tax year.[15] Repayments continue until either the loan is paid off, the payments have been continuing for 25 years, or the student turns 65
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