Wednesday January 10, 2007
Guardian Unlimited
"WHEN I made my course choices I didn't think about the cost," says Jim Hunkin, a 22-year-old geography graduate. "I chose my courses on merit."
Jim did a three-year degree at London University and is now working at his university's students' union while looking for a graduate job. He wants something that pays him more than his current salary of £16,000 so he can start to pay off his loans. He owes £15,000 in student debt and admits he has "no idea" how long it will take to pay off.
Calculating repayments is an inexact science dependent on salaries, time off and one-off payments, but the National Union of Students (NUS) takes a good stab at it. The rule is you pay 9% of what you earn over £15,000. Given a "typical graduate salary profile", they say a £20,000 student loan will take 22 years to pay off. So Jim's £15,000 will take him just over 16 years to clear.
His case is normal. "Most people would have £15,000 debt," Jim says of his fellow students. It is, he admits, "quite scary if you think about it as an amount." But he adds: "When I got them, I didn't think about it. It's just something you did."
Graduates starting a three-year course this year can expect to have debts of £20,000 by the time they graduate, according to Barclays. The Department for Education and Skills (DfES) says the figure will be lower, around £15,000.
However, the stark news for sixth-formers now applying to university is that the actual cost is even higher. The DfES puts it at £10,273 a year, the NUS says it is £10,980. Either way, it's at least £30,000 over three years.
Living costs
So where does that money go? A good chunk of it is on fees. Annual course fees are now typically £3,075 at most universities. This is capped by the government, but is likely to go up slightly each year. Students must pay course fees in advance.
The other big chunk is accommodation. The NUS says the average cost is £2,580 a year with wide variations depending on where you study. Self-catering halls of residence can cost £46 a week in Scotland and Wales, or £77 in London. Private accommodation is £50 a week in the north-east of England, and double that in London.
Studying in London, Jim paid £6,000 a year for a room in a flat. "I couldn't find a private landlord to do nine months," he says. "I've got friends who went to Hull and paid £2,000 for a whole house."
After that there are gas and electricity bills, phone bills, travel, food, clothes, sport, socialising, books and a computer. The NUS says the average total for that is £5,330 a year.
Funding the lifestyle
So where does the money to pay for this come from? The rules changed last year and there are now four official revenue streams - course-fee loans, living-costs loans, bursaries and grants. There are also several unofficial or commercial ones - part-time work, family contributions, overdrafts and credit cards.
All students can get a loan to cover their course fees (medical students and dentists have their fees paid by the NHS). The money is paid directly to the university or college and the student pays it back when he or she starts working.
Both living-cost loans and maintenance grants depend on circumstances. A maintenance grant is money given to you by the government to help cover living expenses, which you don't have to pay back.
How much you get depends on your circumstances. If your household (or parental if you are under 25) income is less than £17,910 you can get the maximum grant of £2,765.
If it's between £17,910 and £38,330 you will get a partial grant. Above that and you will not get a grant.
Living-cost loans depend on where you study and how much grant you get. The most you can borrow is £3,495 if you live at home, £4,510 if you live away from home and study outside London, and £6,315 if you live away from home and study in London.
All students can get at least 75% of the maximum, or £2,620, £3,385 and £4,735 respectively. Whether or not you get the rest depends on how much grant you get. If you receive a full grant you won't be able to borrow the full loan. Get a small grant and you can take out a bigger loan.
Equal opportunities
The aim of the system, says the DfES, is to encourage people from poorer backgrounds to study, and make sure each student has a similar amount of money made up of different degrees of grant and debt.
After that there are bursaries, which are distributed by individual colleges or universities. Typically they do not amount to much - if you qualify for the full maintenance grant and your fees are around £3,000 you'll get £300. However, the DfES says that the average bursary is around £1,000.
Unsurprisingly, the cost of studying is having a big impact on where people study. A NatWest survey last year, for example, revealed 22% of students now live with their parents, a jump of 16% from 2005.
Most students work as well. The DfES says 56% of students have a job and work an average 13.5 hours a week earning £6.10 an hour - about £4,200 a year.
Jim didn't work during term time. "I was quite lucky," he says, "but I worked full time during the holidays." As a tour guide and shop assistant at Eton College in Windsor he earned £6,000 a year, enough to pay for his flat in London.
As well as working, students will have access to an overdraft facility (£1,500 interest-free is fairly standard with student accounts), and as a last resort, credit cards, but steer clear of store cards with their perilously high APRs, which the NUS has branded "evil". Some students - those who are disabled for example - may also qualify for certain benefits.
Despite the high cost, however, both the DfES and NUS agree it is still worth paying to go to university - over a lifetime a graduate will earn on average £100,000 more than a school leaver with two A-levels.
And Jim says he would also do it again, despite the high cost of London living. While admitting his parents are "quite shocked" at his debts, he is fairly relaxed about them. "I got quite worried when I applied and did some spreadsheets. But when I got here I spent it, and I didn't really look back."
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