One of the biggest stresses of becoming a student and beginning your time at university can be money. Learning to budget, being financially independent from your family and living away from home is a first for most of us when we start uni, and 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. So how exactly will my parents income affect my loan?
So how exactly will my parents income affect my loan?
Dependant Student or Independent Student? Everyone’s student loan comes in two parts – tuition fee’s and maintenance loan. Everyone, no matter their parents income, is entitled to up to £9250 a year in loan to pay their tuition fee’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 payed directly to them. If you’re a dependant student, that means that the amount of student finance you receive will be determined by your gross taxable household income (basically what your parents make in a year after tax). You’re generally classed as a dependant 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, but 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, so for example 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; • You have custody of a person under the age of 18 on the first day of the academic year. • You’re 25 or over on the first day of the academic year. • You’ve been or are still married or in a civil partnerships before the start of the academic year. • You have no living parents. • You’ve supported yourself financially for at least 3 years. • 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. • You are permanently estranged from your parents. If this is the case, you will need to provide evidence for this, for example letter 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, but 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. 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, which is £5,981. Please bear in mind that your exact amount of loan will be dependant on the exact income, down to the last penny. A quick and useful tool to check in under 5 minutes how much you’ll get is the Student Finance Calculator https://www.gov.uk/student-financecalculator/y The amount of maintenance loan you get can be a deciding factor on where you go to uni, and your parents income will have a big affect on this, so its important to know your stuff. Although it can be boring, budgeting well can make your uni experience so much easier. Theres nothing worse than having to spend the month before student loan living off beans on toast. We also busted some common myths about student finance here which is also a useful read https://unifresher.co.uk/clearing-the-myths-on-student-finance/