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Student loans

Aim
Student loans are part of the Government’s student support system, which shares the costs of higher education between students, parents and taxpayers. Student loans have played an important part in the Government’s objective to increase and widen participation in higher education.

Key features
Higher education in the UK is publicly funded through direct government grant; with additional discretionary elements provided by grants from the HE funding councils in England, the National Assembly for Wales, the Scottish Executive and the Department of Education (Northern Ireland). In addition, HE students have been eligible for publicly-funded grants and loans (see below) to cover their maintenance expenses whilst studying.

In 2011, the Government spent ?5.9 billion on higher education in England and Wales - ?4.1 billion on direct funding of higher education institutions and ?1.8 billion on student support (including student loans, mandatory awards for maintenance and fees, access funds and bursaries, and student loans administration).

Student loans were introduced in 1990/91. These loans have a zero real interest rate (i.e. they rise only at the rate of inflation), and students are not required to begin repayments until the April after they have completed their course or left higher education.For more information just visit our site www.payday-street.com

The original, mortgage style loans are repaid direct to the Student Loans Company (SLC) as a fixed monthly amount for those earning over a minimum threshold, (set at 85% of national average earnings). However, for most new students from 1998/99, this was replaced by an income-contingent repayment system, where loans are repaid as 9% of any income earned in excess of ?10,000 p.a. Details of the repayment process are set out below.

As chart A3.2.1 above shows, the take-up of student loans is high and rising. In 2011, 74% of students took out a loan, and the average value of the loan was ?2,520. There was also significant borrowing from other sources, such as commercial loans and overdrafts, and loans from family and friends. On average, total debt for full-time students in 1998/99 was about ?3,300; however, this is reduced to ?2,500 on average once savings have been taken into account.

The trend shown in chart A3.2.1 partly reflects the gradual shift from maintenance grants to student loans. In 1998/99, maintenance grants were still available for students with low parental income to cover up to 25% of maintenance costs.Read more articles from this author: Housing loans. From 2011, grants have been phased out for most new students, whilst loans have been extended (except for students in vulnerable groups who are eligible for supplementary grants). Hardship loans have also been introduced for students in serious financial difficulty; they rose from ?250 in 2010 to ?500 in 2012.

Another recent change is in relation to tuition fees. Students entering HE in 1998/99 were required for the first time to make a contribution to their tuition fees. The maximum tuition fee contribution in 2000/01 is ?1,050.And also add him to friends at faxless payday loans. This represents about a quarter of the average cost of a course. Tuition fees are income assessed. How much, if anything, a student pays depends on their income and that of their family. In 2011, 35% of students paid the required contribution in full; 20% paid part of the contribution, and 45% paid no fees at all (next year this figure is set to rise to 50%).


Administration
Student loans are administered by the SLC, (in partnership with the local authorities in England, Wales and Northern Ireland, who assess eligibility for a loan). This is a limited company owned by the Government and designated as a non-departmental public body. Funds for the loans (and their administration) are provided by DfES, the Student Awards Agency for Scotland and the Department of Higher and Further Education, Training and Employment (Northern Ireland).

The SLC is based in Glasgow on two sites - a contact centre organised on functional lines (c. 550 staff) and a processing centre (c. 50 staff).What is Payday loan? Wikipedia know everything. It deals with the administration of much of the loans process, including the administration of two tranches of the old mortgage style loan books sold to the private sector (a service provided under contract following a tendering process), using a bespoke IT system. Some of the bad debt recovery work (pursuit of arrears) is contracted out to private debt collection agencies across the country, working with the SLC tracing team.

The repayment of the income-contingent loans is administered by the SLC in conjunction with the Inland Revenue (IR). The graduate’s details are passed to IR, which matches these to tax records and instructs the employer to deduct the repayments along with tax and NICs deductions under the operation of PAYE. An annual reconciliation between IR and SLC updates the graduate’s loan account balance.

This works well, but does impose an additional administrative cost on employers. For the self-employed, repayments are made via the self-assessment return. The SLC collects repayments from those not subject to UK tax, and from those repaying mortgage style loans.For more visit cash advance loans

The default rate for student loans is relatively low. In 2011, about 5% of borrowers had defaulted on payments (with an additional 1% classified as ‘overdue’). However, a further 22% were deferring payment - this relates to deferment of the old mortgage style loans, which is possible if the borrower earns less than the lower limit, is unemployed, or suffers from an illness/disability. As the new system of income-contingent loans (ICLs) provides for direct repayment via employers, high repayment rates might be expected to continue, at least for those going into employment.



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