British undergraduate and PGCE students can apply for a loan through their local education authority (LEA) in England and Wales, the Student Awards Agency for Scotland (SAAS), or their local education and library board in Northern Ireland. The LEA, SAAS, or education and library board then assesses the application and determines the amount that the student is eligible to borrow, as well as how much tuition fees, if any, the students' parents must pay. The family's income; whether the student will be living at home, away from home, or in London; disabilities; and other factors are taken into account. 75% of the full loan (around £3,000) is available to all students in England and Wales, with only the final 25% being means-tested (taking the total available up to just over £4,600 for those studying outside London and £6,475 for those living away from the family home and studying in London). Scotland has a slightly different assessment method where more of the loan is means-tested with a minimum loan of only £840. However much you get, it is paid in three instalments during each year of the student's course (one per term). Special rules apply for some courses and for part-time courses.
Loans are provided by the Student Loans Company and do not have to be repaid until the April of the year after students have completed their course and are earning £15,000 a year. The interest rate is updated annually and is tied to inflation (currently 4.8%). It is applied only to maintain a constant value of the outstanding loan, as the 'buying power' of the pound changes and not to provide 'earned interest'. The loan is normally repaid using the PAYE system, with 9% of the graduate's gross salary over £15,000 automatically being deducted to pay back the loan. There is no particular schedule for clearing the debt, but, if it has not been cleared 25 years after repayment began, or the student turns 65 years old, the remaining debt will be cancelled, in circumstances where the borrower has fully met their repayment obligations and not defaulted at any time when they should have been repaying. For students beginning courses before 1998, the arrangements for repaying and deferring are different. Although Scottish students have their tuition fees covered by the SAAS during their time of study, much of this is actually repaid in a Graduate Endowment. The Graduate Endowment has now been abolished and new students will not be required to pay it.
The Higher Education Act 2004 made significant changes to the loans system in England, Wales and Northern Ireland from 2006. Those with sufficient private funding can still pay tuition fees 'upfront' but everyone - regardless of their income - is now entitled to take out a loan to pay their fees. For those who take out a tuition fee loan, the Student Loans Company pays their fees direct to the place of study and the student, once they have graduated or left their course, Universities are now required to sign a special agreement with the Office for fair Access and, in return for an undertaking to provide a minimum bursary of £300 for all students who qualify, they may now charge tuition fees of up to £3,070. Students who began their courses prior to academic year 2006/07 are entitled to borrow additional loans to cover their tuition fees (which remain at the old rate).Critics claim these top-up fees will create tiers of "expensive" and "cheap" universities and make university financially inaccessible to many students. As a result, there have been national demonstrations and protests by students' unions.
For all students whose 'domicile' (family or full-time home base) is in England, radical changes are underway to enhance and improve the student finance system. Now known as Student Finance England, this is a comprehensive new service which is being phased in between now (2008) and 2012 and is being based on widespread consultation with students, prospective students, parents and other 'sponsors' helping a student through university. It seeks to reduce significantly the amount of time and effort required to apply for finance and the system is being constructed in a way which joins up the main agencies in higher education in a way that has not existed hitherto. The time scale of application is being changed, so that a student will be able to apply for finance at the same time as they apply for a university place and information is being shared in such a way that repeated requests for the same student details will be got rid of. First year students applying this year for a place in 2009 will have to deal with just two agencies - UCAS (to apply for a place) and the Student Loans Company, which will share much of the information supplied to UCAS and will then assess the applicant's eligibility for finance and make the appropriate payments. This service will be increased and extended to second and third year students in the subsequent two years until all applicants are assessed in the same way by SLC. Already, student finance has been radically changed to make it much easier for people from less well-off backgrounds to attend university. Now, anyone from a home background earning less than £25,000 but not more than £60,000 after normal deductions is entitled to a maintenance grant, the size of which(up to £2,835) will depend on income. Also, those entitled to the full maintenance grant are automatically entitled to the full bursary at their place of study (which can be up to £3,000 but is typically £1,000 per academic year). This year, the maximum loan amount for studying in London is £6,475 and (away from the family home) elsewhere £4,625.
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