Student Loans Company - Things you should
know before you apply

Applying for a loan through the Student Loans Company can be intimidating. You aren't sure who to call, how to apply, or how to deal with the company once your loans have come through. The following information will help you figure out the ins and outs of student loans so that you feel more confident about your choices.

Student loans originally started about twenty years ago or so to help students with the cost of living while at university. Then in 1998 the UK government chose to extend the scheme and have students pay for some of their university education too. Compared to other countries in the world, the costs are relatively low. Still, you may be unable to afford the cost of your course as well as living costs while you're a student. Using a loan from the Student Loans Company could be one of the best investments you'll ever make!

In fact, having a university degree can make a huge impact over the course of your life. Just think about the job opportunities that will be open to you with a university degree. Not only that, but a degree can also help you advance in the career you've already chosen. Even if you're taking out a loan now, you'll get more than your money's worth out of your loans.

Who is the Student Loans Company? What do they do?

The Student Loans Company is a government-managed company that gives out loans and grants to students in England, Wales, Scotland, and Northern Ireland.

The loans written by this company are government subsidised, which means that the government pays the interest on the loans while you're at university.

Who and what are eligible for student loans?

Pretty much any UK born or resident student can get a student loan. You can get a loan for your tuition costs, as well as loans or grants for living expenses while you're at university. Since you can't work much and keep up with your course work, you may need this extra money more than you think. Also, if you have children or adult dependents or a disability, you may be eligible for other loans, too.

What about paying the loan back?

Many people are afraid to take out student loans because they don't want the burden of paying them back. However, the Student Loans Company gives you almost interest free loans, and they're easy to pay back.

How the interest works

During your university years, the government pays the interest on your loan. When you leave university your loan will start accruing interest. However, the interest on these loans is so low that it's like having an interest-free loan.

What's really happening is that you aren't paying true interest at all. The Student Loans Company is simply adjusting your loan for inflation each year.

How repayment works

The repayment system for student loans is another thing that makes them worthwhile. In order to start repaying your loan at all, you have to earn at least £15,000 a year.

Basically, your payments are 9% of anything you make in a month over £1,250. That means that if you earn £1,600 in a month, you'll pay £31 per month. If you earn £3,000 in a month, you'll pay £157 that month. That seems like a large amount, but with the sliding scale, you'll never really notice the missing money from your paycheque.

Paying that 9% is really easy if you're employed. It just comes out of your pay every month, just like your tax does and you'll see it on your payslip so you can see clearly how much you've paid back. Since you only pay when you reach a particular threshold, you'll never notice the money coming out of your pay.

Remember that even though these loans can take a while to repay, they are effectively interest free. You probably won't even notice the money you're putting toward your loan, either. If you want, though, you can make extra monthly or annual payments to get rid of your loan more quickly.

Other facts about student loans

Many people worry that getting a student loan will negatively affect their credit rating. This isn't the case. Having a student loan doesn't affect your credit rating, and it won't stop you from getting a mortgage in the future.

The loan system is national, but it is split into four systems, one each for England, Scotland, Wales, and Northern Ireland. You have to apply based on where you live. The application deadlines are different for each section as well, so be sure to keep that in mind as you apply.

It's vital that you apply for your student loans as soon as you can. If you're worried about meeting the deadline but haven't chosen a university yet, just put your first choice down on the application. You can always change it later on.

Problems with the Student Loans Company

2009 fiasco

In the autumn of 2009, the Student Loans Company was having problems with processing applications. At times 95% of phone calls were going unanswered, and thousands of students had to rely on their universities for help when their loans weren't processed. Eventually, an investigation found that the structure of the organisation as well as problems with its equipment caused most of the problems.

The company has since been restructured, and new heads of departments have been brought on. However, the delays that started in 2009 may continue for a few years until the kinks are worked out. This means that you need to get your application in for a loan as soon as possible. If you haven't heard about your loan situation before university starts, contact both the Student Loans Company and your university to see what can be done to help you.

Bureaucratic problems

Like many other government organisations, the Student Loans Company can have some problems with bureaucracy. Often, it's difficult to get through on their phone lines. It can be difficult to get the answers you need without being transferred several times. Also, the online system can be confusing and difficult to use.

Before you sign any loan paperwork, make sure you understand all the terms. If you can, get on the online system to see if you can figure out how it works. This may help you in the future. Again, acting quickly is key here. Don't wait until the day before you're set to go to university to call them if you have a question about your student loan.

Interest rate changes

In 2009, the government passed an act that changed the interest rate on student loans, effectively making them have a small interest rate for a year. The rate went back down to the rate of inflation, but it could go up again. Be prepared for this change. Even if a student loan becomes a low interest rate loan in the future, it will still be a good investment in yourself and your future career.

It is essential to track all of your student loans paperwork carefully and to ask questions when you have them. As long as you are proactive about keeping your information together, you should be able to quickly rectify any problems with your loans.

The Student Loans Company is a government-managed company that gives out loans and grants to students in England, Wales, Scotland, and Northern Ireland.

The loans written by this company are government subsidised, which means that the government pays the interest on the loans while you’re at university.