Primrose Kitten

Attending university is a massive investment. Not only is it three, four, or five years of your life, but it also costs tens of thousands of pounds. The other question, however, is whether you can afford not to go to university? You should also consider how much do you have to pay upfront, and what your options are if you can't get a job afterward.

Many students worry about tuition fees and whether or not they can afford university. I'm sure you've heard loads and loads of horror stories about the amount of debt you'll be in if you go to university, so I'm going to break things down and make things as transparent as possible for you.

While you're at university, there are going to be two main areas where your money will go: tuition fees and living costs. You can get a loan toward your tuition fees of up to £9,250, depending on where you live and what course you're taking. You can get a further loan to cover your living costs, as well. The tuition fee loan is paid straight to university, so you won’t have to deal much with that, but the living cost loan is paid straight into your bank account, likely on a per-term basis.

The loan to cover your living costs will depend on what type of course you're taking; whether you're doing a teaching course or a medical course; what kind of background you come from; whether your parents are in employment; whether you have support from your parents or partner; how much your parents and partner are earning; whether you're going to university in London; whether you're going to university outside of London; whether you're going to be living at home or living on your own. These loans only have to be paid back once you've left university and once your income passes a certain threshold, currently set at £21,000. Then you only pay it back as a percentage of your income. Interest on the amount is charged right from the beginning, and you will have to pay that off as well.

You do not have to pay for university upfront, nor do you do not have to start saving money straight away. You'll get a loan, and then you’ll pay it back years later once you're earning.

Let's consider an example. We have a student whose parents are both employed. They're each making £20,000 a year, so the combined household income is £40,000, a little bit below the national average. This student will go to university full time, paying £9,250 in tuition fees, and living away from home, outside of London. They will get £9,250 in tuition fee loans each year, and then on top of that, they will also get a £4,920 loan for living costs.

This student will get roughly £14,000 in loans a year. Over a four-year course, taking into account interest, by the time you have to start paying it back, this is going to be around £60,000. It sounds like a lot of money, and it is a lot of money, but it shouldn't be scary.

Somebody who has no parental help, living and studying in London, can get up to £11,000 pounds for living costs as well as £9,250 for tuition fees. They're going to have a loan of £20,000 per year, or £80,000 after four years.

You’ve got massive debt when we're coming out of university, but how much are you going to pay back?

Once you start earning over £25,000, you pay it back at nine per cent of your income over £25,000. The average starting salary for a graduate is £29,000, so you pay interest on the difference between £25,000 and £29,000, that's £4,000. At nine per cent of that £4,000, this works out as £30 a month from a take-home salary of £1,690, not very much at all. Not a massive impact on your daily life. That's a takeaway pizza or going out, or a pair of shoes. If you earn less than £21,000, you'll pay nothing. You don't have to worry about paying it back at all. You only pay it back once you pass £21,000, and then you just make payments for 30 years. After 30 years, it's entirely written off. If you have a starting salary of £25,000, in 30 years, you'll have paid off about 80% of your debt, and then the rest of it will just be forgotten. It is not the horror story that the newspaper headlines are trying to make it out to be. Yes, it’s scary owing £50,000 or £60,000 pounds in your early 20s—it is a lot of money, but the repayments are very manageable. It's a small amount of your take-home pay, and that level of pay might not have been available to you if you hadn’t gone to university and didn't get that degree.