Prior to 1990, students received free tuition fees and also received maintenance grants for living costs.
All education was still free. Students were also provided support by way of grants for living costs.
There were some disadvantages with this arrangement. Some students who had little idea of what they wanted were able to quit and take other courses. This option would increase their time in university/college, thereby causing more costs.
The Student Loan Company was formed in 1990 and provided loans with a low-interest rate. The loans were to assist students with their living costs.
In 1997, there was a new government, who introduced a new act of parliament, called Teaching and Higher Education Act 1998.
It introduced tuition fees starting that year. It also replaced the maintenance grants with loans, but poorer students were excluded.
In 2016, the maintenance grant paid to poorer students was also been replaced by a loan.
In his budget, Mr Osborne the then Chancellor of the Exchequer stated the grants had become “unaffordable”.
Tuition fees also increase to £9000
The average loans, students end up with are in the region of £30,000.
Even though the loans are written off after 30 years, students still worry about the debt, as do their parents.
There is a misconception that by continuing to studying after leaving mainstream school, in institutions like college or university will result in a person earning more. Where in some cases this is true, but how many ex-students are working in fast food places, or have low paid jobs.
Mortgage, Loans and any other forms of Credit
It is stated that student loans do not affect a person’s credit rating, so does not affect them getting mortgages. loans, or other forms of credit, this is false.
Questions are now asked as to what level of education a person had. If the answer to this is further education, this used when working out the affordability of the mortgage, loan or other forms of credit. It must be stressed you cannot lie when asked, as to make a false statement on an application could
Financial institutions are aware of the amounts an ex-student has to pay to settle the loan, they also include the assumption that the amount to be paid back each month will increase, by future government policy.
The fact a person has a student loan does affect their creditworthiness.
We must stress, however, irrespective of how much the loan is for, or if it has been paid off by the bank of Mum and Dad, financial institution do not take this into account.
Any ex-student will be assessed as having a student loan debt.