Student Finance Day 2012 – Understanding the new university finance system for your children

As Freshers’ Week (an annual festival to launch students into university life), run by all the student organisations on campus kicks off across the country, it marks the beginning of a new chapter in many young peoples’ lives, and most importantly, a new student finance system for English Universities.

Student Finance Day (20 September 2012) is the focal point for the media and the education sector to talk clearly about the new student finance system in England – and dispel some of the myths and misunderstandings out there, particularly for parents of prospective students. The Independent Taskforce on Student Finance Information (headed by Martin Lewis of and who co-ordinate Student Finance Day), is conscious that the changes to the traditional student finance system is a concern for many parents and believe that it’s important for us to all understand the ins and outs of the new system based on accurate facts.

As part of Student Finance Day, universities, schools and colleges across the country are joining together to host events and disseminate information to help prospective students and their parents get clear and accessible advice on student finance, particularly on the new repayment scheme in place.

As your children may be facing the prospect of £9,000 English tuition fees for the first time, or perhaps you anticipate your child will visit Open Days for 2013 entry, new research released shows a high level of confusion over the new student finance system remains, with 60% of prospective students have ‘worrying misconception’ about student finance.


In particular, the research (carried out with 14-18 year olds and those starting university this autumn) also highlighted the following*


  • Students wrongly worry about repaying when not earning.  The research found 63% of English 14-18 year olds and 60% of those starting university in 2012 are worried about how they’ll repay the loan if they are unemployed or a low earner after university – despite attempts to publicise that repayments only come into effect after graduation and provided you earn over £21,000 – and even then it’s proportionate to earnings.
  • Students wrongly worried about the impact on their credit file. Some 61% of English 14-18 year olds and 55% of the 2012 cohort are also worried about student loans going on their credit files – even though they don’t.

Perhaps unsurprisingly given these findings, as many as 65% of 14-18 year olds and even 33% of those starting university this autumn admit they still don’t think they understand enough about the new student finance system; with 59% of those starting university imminently and 74% of those aged 14-18 wanting more information about the system and how it might affect them.


Importantly to parents, the impact of this is that 61% of 14-18 year olds admitted that the changes had made them think harder about whether to go to university, and 91% felt that if they did, they would need to work whilst at university to financially support themselves.


Head of the Independent Taskforce on Student Finance Information, Martin Lewis of said:

“The tragedy is, it’s likely a good chunk of potential students are choosing not to go to university due to misplaced fear.  Worse is, I suspect it’s those from non-traditional university families who are most risk averse and most affected.


“Part of the problem is there’s too much focus on the headline amount being borrowed – a mostly irrelevant figure. What really counts is how much needs repaying and that depends solely on what’s earned after university.  You repay nothing under £21,000 and above that, the more you earn, the more you repay. Financially at least, it is effectively a no-win, no fee system.”


Ultimately, it’s important for parents to get to grips with the new student finance system, and by taking the time to understand and explain these changes to your child, it will ensure that they enter into higher education with a clear head, with the drive to succeed in, and enjoy every part of the experience.

If you’d like further information on the new student finance system, why not take a look at Martin’s videos and facts for parents in the links below:



  • Video from Martin explaining the student finance changes:


  • Guide for parents:

The Independent Taskforce on Student Finance Information is headed by Martin Lewis of, and you can see more of his myth-busting advice at

 Student Finance Day 2012 – Ten point myth buster

  1. You don’t pay up front to go to Uni.

    First time undergraduate’s fees are automatically paid by a Student Loans Company loan. There are also loans of up to £5,500 to live off (£7,675 in London) and those from families with income under £42,611 get living grants of up to £3,354.

  2. Students don’t repay, graduates do, but only if they earn £21,000+.  

    You repay 9% of everything earned above £21,000 starting the April after graduation (2017 for most). This £21,000 will rise from 2017. Those who never earn over it, never repay.

  3. Monthly repayments are the same on £6,000 or £9,000 fee courses.

    As monthly repayments depend ONLY on earnings, the course fee size doesn’t impact it.

  4. It’s wiped after 30 years. Whatever you still owe, repayments stop after 30 years.
  5. There are no debt collectors.

    Repayments are taken via the payroll, just like tax. So you never actually handle the cash, meaning there are no debt collectors chasing.

  6. Repayments are £470/year LOWER than before.

    Those asking “how can anyone live with such debts?” may be surprised that future graduates will initially have MORE disposable income than today’s graduates as they repay above £21,000 earnings (under the old system, it was £15,795). This is also a mild improvement for building a deposit and getting a mortgage in the early years after graduation.

  7. You will owe for LONGER and may pay MORE.

    The bad news is compared to today’s graduates, 2012 starters onwards repay less each year, have much bigger loans and pay higher interest (as much as inflation plus 3%), so it’ll take MUCH longer to repay than now and depending on earnings, may cost a lot more.

  8. Many will NEVER pay it all back.

    Even many starting on £25,000 graduate salaries (and rising after) won’t repay everything owed within the 30 years (test your situation at meaning they’ll often be repaying for much of their working life.

  9. Many won’t pay more on £9,000 courses than £6,000. 

    As even many £25,000 starters won’t repay combined £6,000 tuition fees and living loans before the 30 year wipe, it won’t cost them any more to take a £9,000 fee course.

  1. Paying up front could be throwing £10,000s away.
    Fee fears means some parents aim to pay them upfront.  For those planning to use savings, remember as many won’t repay what they borrowed at today’s prices before the 30 year wipe, you could be throwing big money away.  Don’t make knee jerk decisions to pay upfront, without doing research.

*All figures, unless otherwise stated, are from ResearchBods. Total sample size was 1,300, of which 800 are 14-18 year old students currently in school or college and 500 are starting university in Autumn 2012. All respondents were based in England. Fieldwork was undertaken between 7 and 11 of September 2011. The survey was carried out online.


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