Many parents are proud when their children get into university. However, what happens when they’re expected to pay towards their child’s further education? In this article, we explain:
- What the Student Loans Company awards all undergraduates
- Calculating the maintenance loan
- How much parents contribute
- How students help finance their further education
- What parents can do if they struggle to pay their contribution
A lot of publicity is given to the fact that graduates finish a 3-year degree course owing on average £35,000-£40,000 to the Student Loan Company. However, much less is written about the fact that parents are often expected to make a financial contribution to their children’s living expenses. We fill in this lack of information by explaining everything parents need to know about financing for degree courses. We first explain what funding is awarded to all undergraduates and what parents should pay for. If you have problems, we look at ways to help.
What does the Student Loan Company award all undergraduates?
The yearly tuition fees for a degree course have been capped at £9,250 for the 2018-19 academic year. However, if students are studying at a university which hasn’t been rated gold, silver or bronze, they will pay up to £9,000 while local colleges will cost much less. Money for tuition fees is paid automatically, and students don’t have to worry about arranging its payment. This money is paid for all students and isn’t assessed according to household income.
Calculating the maintenance loan
The second part of the student finance package is the maintenance loan which is awarded to cover a student’s living expenses including their accommodation, utilities, food, transport, entertainment and leisure activities and so on.
This part of the package partly depends on where the student lives and studies. Therefore, students who choose to live at home receive less money (up to £7,324), and the highest amount is given to students living away from home and studying in London. The maintenance loan is also means-tested so that the annual household income is taken into account. The highest amount that students who are studying away from home can receive is £8,700 a year (or £11,354 for those based in London).
How much do parents contribute?
Any household with an income of £25,000 or under won’t be expected to pay any money towards their child’s university living expenses. At an annual income of £30,000 the maintenance loan would be £7,825 with a parental contribution of £606. This continues on a sliding scale up to a maximum household income of £62,000 or over when the loan is £3,928 and the parental contribution is £4,502. In cases where there is a divorce or separation, the household income of where the child normally resides is used to calculate the maintenance loan.
The only time when household income isn’t taken into consideration is for independent students. To be eligible, undergraduates must be 25 or over and/or married or in a civil partnership.
In order to assess their contribution, households must supply proof of income in the form of their P60 or a Self-Assessment Tax Return and their National Insurance number. This isn’t compulsory, but without proof students will only receive the minimum maintenance loan.
How do students help finance their further education?
With rising costs in the UK, even a full maintenance loan is insufficient to cover students’ living expenses. The National Union of Students has calculated that undergraduates have a shortfall of £170 per month, and this is assuming that parents pay their share. The difficulty is that some parents can’t – or won’t – pay their share. If this is the case, how do undergraduates cope?
In their March-April 2018 University Student survey, ‘Which?’ put this very question to students. The results were as follows:
- 53% – financial help from family
- 46% – savings
- 41% – part-time work (during term-time)
- 34% – summer work
- 25% – bursaries and scholarships
- 6% – no other sources of income
- 3% – other
What can parents do if they struggle to pay their contribution?
As the above list shows, there are many things that undergraduates can do to supplement their maintenance grant such as working during the term or the summer holidays. However, what can their parents do?
Bursaries and scholarships
There are a variety of bursaries and scholarships available, but their provision depends on the institution students attend or their field of study. Others have criteria like academic ability, household income or disability. Unfortunately, some aren’t claimed every year.
In the above research carried out by ‘Which?’, 6 out of 10 students didn’t apply for them. When asked the reason, 73% said they didn’t think they were eligible; 15% didn’t know where to get information and 11% said they were too late. Information can be found from the university, local authorities/charitable institutions or online.
Deciding on the right university
When undergraduates attend Open Days at different universities, they should ask about bursaries or scholarships. The answer could influence which university they attend or even which course they do. The location of the university can have another effect. Although moving away from home is part of the whole undergraduate experience, attending one closer to home and commuting is another possibility to be considered, especially if things are difficult financially.
Many academic institutions offer hardship funds for students who are struggling to make ends meet. Undergraduates can find out further information from their Student Union or from student financial advisors.
Parental contribution is based on the household income declared on the previous tax year.
Asking for parental income to be reassessed
Parental contribution is based on the household income declared on the previous tax year. If you find that your circumstances have changed and the household receives at least 15% less than the amount declared, you can ask for a Current Year Income Assessment to be carried out. As a result of this application, the parental contribution could be reduced and a larger maintenance loan awarded.
Although borrowing money to pay the parental contribution might seem an attractive option, the problem is which financial product would be the best option. Remember that the course will last for 3-4 years so short-term loans would be prohibitively expensive.
The ‘hidden nasty in the system’
The parental contribution for undergraduates has been called “a hidden nasty in the system” by the think tank, the Higher Education Policy Institute. Although the maintenance loan is assessed according to household income, it isn’t compulsory for parents to pay it. If you do struggle to make up your child’s money, there are solutions. If money continues to be tight, you know that your child can work (both during term-time and the summer). This teaches them lessons of self-sufficiency, discipline and hard work which will be sure to help them in the future.