Student fees: How to survive the new regime

This autumn's new financial arrangements mean students are paying higher fees - but receiving more in grants and bursaries. Amy McLellan explains

Published: 16 August 2006

Students entering higher education this autumn have the dubious honour of being the guinea pigs for a new higher education financing regime. But being a guinea pig isn't all bad news: many in higher education believe the new arrangements could yet prove to be good news for hard-pressed students, particularly those from lower income backgrounds.

From September, universities and colleges can charge tuition fees of up to £3,000 a year for new full-time students. Most have opted to charge the full £3,000 but there are some notable exceptions, among them Leeds Metropolitan University (£2,000), Greenwich University (£2,500) and Thames Valley University (£2,700).

There's much greater fee variability in the further education sector. According to the Office for Fair Access, which checks higher education institutions are using a proportion of their new income to offer bursaries, only 25 of the 146 further education colleges that provide higher education are charging the full £3,000.

The new fees sound scary, but students and their parents need to remember they don't have to find this money up front. They take out a student loan - from the Student Loan Compan - to cover the fees, which they don't have to start to pay back until they finish their studies and are earning over £15,000 a year. The loan is effectively interest-free and repayments are linked to earnings: someone earning £20,000 will repay around £8.65 each week, no matter how much they owe. And after 25 years, any outstanding balances will be written off by the Government.

This, of course, still leaves the matter of living costs, which vary depending on where you study. As a rough guide, the bills can add up to £6,000 a year outside London and £9,000 in the capital. Again the solution is debt. The student maintenance loan is means tested and can amount to £4,405 for students outside London and £6,170 for those studying in the capital. The same terms apply to this debt as to the tuition fee loan.

But debt isn't the only form of financial support open to students. This year, full-time students from lower income households will be eligible for a maintenance grant of up to £2,700 per year. Up to £1,200 of the grant will displace part of the student maintenance loan: the thinking here is to reduce the debt burden which might deter students from lower income families from applying to university. The amount you receive depends on family income - support is available for households earning up to £37,500.

Universities and colleges charging more than £2,700 in tuition fees - and that's most of them - are also offering bursaries and scholarships to students who receive the full £2,700 maintenance grant. These non-repayable support packages vary but most institutions offer an automatic bursary of £1,000 to those entitled to the full maintenance grant. Luton University will give £300 to all those who qualify for part of the grant, with some students eligible for a £1,750 bursary. Oxford University provides £3,000 for those in the lowest income bracket plus an additional £1,000 in the first year to cope with the costs of moving away from home for the first time.

Some institutions have targeted their financial aid towards students from particularly challenging regions or those opting to study specific courses. Liverpool University, for example, not only offers a bursary of £1,300 to those on the full grant, but also offers attainment scholarships of £1,500 a year for those on particular science or engineering programmes. Keele University has established bursaries and scholarships to encourage students who are otherwise under-represented, such as those from areas of rural deprivation or black and minority ethnic students.

The Office of Fair Access is pleased with the levels of support demonstrated by higher education institutions. But would-be students planning their finances for the year ahead can be forgiven if they feel rather under-whelmed by the process. They have no means of judging the value of the aid on offer and there is no shortcut to comparing and contrasting other than trawling the web or hitting the phones.

This situation may improve for students entering higher education in 2009/10, when the Student Loan Company will link up with UCAS to deliver a single online application service.

It's important, however, that students don't let a £100 here or there sway their choice. "It's a very bad move to be enticed onto a course because there's a bursary attached to it," says Susan McGrath of Manchester Metropolitan University. "Your degree will take three years of your life and influence your career for the next 30 to 40 years."

It's important to make the right decision for you and your future, not your immediate bank balance.

'I worked in the student bar and over the summer in a hotel'

Recent graduate Craig Ryder found summer jobs and an understanding bank got him through a chemistry degree at Durham University

Being a student is not easy financially. You have to make the most of your bank. I had a £1,500 interest free overdraft and I found they were very understanding when things got tight; they would increase the overdraft by a couple of hundred quid while I waited for my loan to arrive.

During term I worked in the student bar and over the summer I worked in a local hotel. The hotel piled the shifts on me, which was really helpful. It's not difficult to find this kind of work, particularly if you stress that you can be very flexible on the hours.

I stayed in catered halls in my first and third years and that made a big difference to my living costs, especially as private rents have really increased in Durham in recent years.

'People shouldn't be put off going because of money worries'

Theatre and professional practice student Amanda Bishop, 21, has just graduated from Coventry University

Before I came to university I had a part-time job at Marks & Spencer and they let me transfer that job to Coventry. I come from a single parent family and had been worried about money but that weekend job, which I had for the full three years, made a big difference. I did 11.5 hours at weekends and it didn't interfere with my studies or social life. And how many students can say they have M&S food in their fridge?

I lived in university halls with six girls. All our bills were included and we all learned to cook, which saved money. I found the library was very well equipped so I only had to buy about a dozen books in three years. People shouldn't be put off going to university because of money worries: you have to put it into perspective and think about the longer term.

'By Christmas I needed a part-time job'

Danny Waine, 22, now in the fourth year of a travel and tourism degree at Newcastle Business School at the University of Northumbria, found budgeting difficult amid the excitement of the first year

The first year was the most difficult. It was the first time I'd had to budget and I found the money just leaked away. When you arrive there are so many upfront costs as you get dragged along with the whole freshers' experience. The university campus was in the city centre so there was a temptation when I had some spare hours between lectures to go into town, have lunch, go round the shops and then go straight out in the evening. It all adds up. By your second year you have your established friends and don't feel the need to go out all the time. But in the first year you do have to go out and socialise to build those friendships and that does cost money.

By Christmas of the first year I realised I needed a part-time job. I worked in a bookies at weekends and the money was really helpful. I also worked over the summer holidays and that helped pay off the credit card.

As soon as you become a student, it feels like everyone is throwing money at you. You're given bank loans, overdrafts and credit cards but it's important to remember it's not real money. You do have to pay it back at some point.