Latest news: Managing university fees

As 58% of universities go ahead and charge the maximum £9,000 fees from 2012, a new guide aims to reassure students about the repayments. 18/07/2011

Moneysavingexpert.com has released its ‘Students 2012 – the facts’ guide this week. Many students have been discouraged by university with the advent of increased top-up fees, but the guide suggests it’s only the repayment costs which will actually have an affect.

Repayments are based on earnings and not on the amount borrowed, so you are effectively paying the same amount back each month, regardless of the size of the loan.

The new fees only affect undergraduates starting a university or college in 2012. If you were enrolled on a course before then, you stay with the current fees and repayments.

If you earn under £21,000 you’ll never repay the fees. You only pay 9% on annual earnings above this threshold. The loan is also repaid through the income tax system, which means no debt collectors. Your employer will take it off your payroll so you never see the money, it simply reduces your pay packet.

So, if the cost of your preferred course is high and a cause for concern, just remember that you’ll only pay back more if you earn a bigger salary after graduating.

When you consider that after 30 years the debt is wiped, even graduates on £30,000 starting salaries won’t have cleared full-time tuition fees of £6,000 and £5,500 living cost by then. Essentially, there are no extra costs incurred if you choose to study a £9,000 a year course.