One of the biggest stresses of becoming a student and beginning your time at university can be money. Learning to budget, be financially independent from your family and live away from home is a first for most of us when we start uni. What’s more, the money stress isn’t helped by how confusing the student finance system can be. Your parent’s income will affect your student loan, and it’s important to know how it does.
Will my parent’s income affect my loan?
Firstly, it comes down to whether you are a Dependent Student or an Independent Student.
Everyone’s student loan comes in two parts – tuition fee’s and maintenance loans. Everyone, no matter their parent’s income, is entitled to up to £9250 a year in loan to pay their tuition fee’s. That’s as long as you are a full-time resident in England (and have been for at least three years.) Your uni will decide the fee’s and the money is paid directly to them.
Most students are dependent students meaning, you have some support from your parents. If you’re a dependent student, that means that the amount of student finance you receive will be determined by your gross taxable household income. That is essentially what your parents make in a year. You’re generally classed as a dependent student if you’re under 25 on the first day of your course and are financially dependent on one or both of your parents- even if you do not live with them.
This means everyone who lives in your household’s income will be taken into account. For example, if your Mum and Dad live together, both their incomes will be added together to determine the amount of loan you receive. However, if you just live with your mum or dad it will be on their income alone. It’s important to remember that this doesn’t just apply to your biological family; this may also include a step-parent.
Sometimes, students can be classed as independent students. This means that your maintenance loan amount will not be assessed on your household income, for one of the following reasons;
1. You have custody of a person under the age of 18 on the first day of the academic year.
2. You’re 25 or over on the first day of the academic year.
3. You’ve been or are still married or in a civil partnership before the start of the academic year.
4. You have no living parents.
5. You’ve supported yourself financially for at least 3 years.
6. Your parents live outside the European Union and cannot complete an income assessment or cannot send funds to you whilst you’re at university. For example, if you are a refugee this may apply to you.
7. You are permanently estranged from your parents. If this is the case, you will need to provide evidence for this. For example, letters from social workers, marriage certificates or P60’s from employers. If your evidence is accepted you will receive the maximum amount of student loan plus any benefits you are entitled to.
Home or away?
As well as your parent’s income, whether you’re living at home or away from home will also play a role in how much you get.
Whether you’re living in halls or found a place yourself, living with or without your parents will also affect how much maintenance loan you get. If you choose to live at home for uni, you will be entitled to less than if you move out. The amount of maintenance loan you get is worked out of a sliding scale, starting at household incomes below and up to £25,000.
However, the highest thresholds work slightly differently depending on if you live with or without your parents, and living in or outside of London.
Hold on, because it gets complicated; If you’re living at home and with your parents and your household income is above £58,222 you will receive the minimum amount, which is £3,410.
If you’re living away from home and outside of London and your household income is above £62,249 you will receive the minimum amount of maintenance loan, which is £4,489.
Likewise, if you’re living away from home and in London and your household income is above £69,977 you will receive the minimum amount of maintenance loan. This is £5,981. Bear in mind that your exact amount of loan will be dependent on the exact income, down to the last penny.
Try the Student Finance calculator
Still confused about how your parent’s income affects student loan? A quick and useful tool to check how much you’ll get is the Student Finance Calculator.
The amount of maintenance loan you get can be a deciding factor on where you go to uni, and your parent’s income will have a big effect on this, so it’s important to know your stuff. Although it can be boring, budgeting well can make your uni experience so much easier.
There is nothing worse than having to spend the month before student loan living off beans on toast.
Need more help with Student Finance? Check out our article, Clearing the myths on student finance.