A recent article in The Guardian revealed that university tuition fees will increase in England in 2013. One-third of English institutions of higher learning will charge the maximum £9,000 permitted for a degree and approximately three out of every four will charge the highest rate for at least one of the undergraduate courses offered. On average, English students will pay more than £8,500 for tuition.
With tuition greater than £6,000 becoming the norm, many students are forced to use loans to finance their education. Loans are available for tuition and Maintenance Loans help with living costs for full-time students. A Tuition Fee Loan is available for part-time students for the first time during the 2012-2013 school year. Continuing students were lucky enough to receive lower tuition fees for courses beginning prior to 1 September 2012 and received a different student finance package.
For students attending a private college or university, a Tuition Fee Loan might not cover all tuition fees. Some students must use private loans to cover the remaining cost. For additional help with living costs, students can apply for student grants. Students who started a course prior to 1 September 2012 begin repaying their student loans the April after leaving the course, once they earn more than £15,795 annually. Students beginning a course after 1 September 2012 will begin repaying their loans as of April 2016, once they earn more than £21,000.
UK students can consolidate their student loans, which involves combining all payments into a single loan. Consolidation enables many students to avoid becoming immersed in educational debt and keeps credit in good standing. Students use a debt consolidation loan to repay existing student loans and then repay this consolidation loan through a single monthly payment. The interest rate on a consolidation loan is typically lower than that for student loans, reducing the amount due each month.[needhelp01]
Taking a consolidation loan usually lengthens the repayment term. Though it will take longer for former students to repay their loans, each monthly installment will be smaller, making it more affordable than the government-mandated repayment amount. With more students unemployed, this financial relief can be beneficial. Students can use consolidation to keep themselves out of bankruptcy, avoiding its detrimental impact on credit.
Experts recommended that former students whose educational loan totals are high and who earn no or little income should consider student loan consolidation. The extended repayment terms and graduated repayments for some loans make these easier for many former students to afford. Some former students who are employed use consolidation loans to lock in interest rates. Reducing the rate of interest may be more attractive than being able to defer repayment.
Students with excellent credit ratings may be entitled to lower interest rates on consolidation loans. If students have improved their credit rating while in school, they may qualify for a lower interest rate than was initially available for a private student loan. Being able to reduce monthly payments and interest rate while repaying student loan debt in order to avoid bankruptcy can be an attractive option.
