Bracing,Yourself,for,Higher,Ed finance, share, loan Bracing Yourself for Higher Education Costs - Are You Ready
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This is a subject dear (pun intended) to many of you, or soon will be. Based on the National Union of Students Press Pack for 2006/07, the costs for students make interesting reading. The Higher Education Act 2004 allowed universities to charge tuition fees from September of this year. It is no surprise that the vast majority are charging the maximum - £3,000 pa. This is inflation linked to 2010, when the government will review the level of the fees. Many students will take out a student loan to cover these fees, which must be taken out in the year of study, as well as a seperate loan for living expenses. These loans are not means tested, but various grants are available as well as institutional bursaries. Living costs tend to be covered by a student loan, with higher allowances for those in London, and the lowest for those still in the parental home. In addition, 25% of the maximum amount a student can receive will be subject to the household income assessment. There are also supplementary grants available for additional costs of study or costs peculiar to them. So what help can students expect in financial terms?Living away from home in London - £6,170 Living away from home elsewhere - £4,405 Living at home - £3,415Please note these exclude the final year when there is slightly less assistance. It is worth noting that students of medicine, dentistry and teaching get their tuition fees paid for them in the final year. It is also important to note that students with parents with higher incomes can have only 75% of the maximum available loan. The loans are then repaid depending on the borrower's income from the following April after graduation. They are repaid at 9% of any income that exceeds the annual income threshold, currently £15,000 pa. So what is the damage to your pocket I hear you ask : (Taking into account the typical overall costs for course fees and living expenses, and presuming tuition fees are required at £3,000 pa, and the student is from a higher income family, then the impact on your pocket will be: London - £6,986 pa Elsewhere - £6,315 paRecent figures from Nat West show that the average debt for a student qualifying in 2006 was £13,252. However, for a student on the new system funding a standard 3 year course in London, student loan debt could total as much as £27,615. Other sources such as Barclays and the Skipton have estimated student debt to be £20,000 by 2010. Length and type of course obviously have a big impact, with 20% of medical students owing more than £30,000 in their final year. A fair question would be "is it worth it"?Do graduates go on to earn more money on average?Well, it seems that the value of having a degree is indeed considerable. The gap between the earning of graduates and non-graduates continues to grow ten to fifteen years after graduation. In 2006 graduates aged 25-64 could expect to earn on average 58 per cent more than those with only secondary level qualifications . But it will definitely cost you, especially if you have more than one child!The Financial Tips Bottom LineThe key is to anticipate these costs and plan ahead to make paying for university costs as painless as possible. You will have a number of options to fund the gap, including funding from income and investing over the medium to long term. As ever, make sure you research ALL your options. If you're already investing/taking action, review your affairs to make sure you're on track to achieve the target amounts.
Bracing,Yourself,for,Higher,Ed