Managing your Student Loan
If you’re a domestic student sourcing loans from Student Finance England (SFE), your main source of income will be a student loan, and when you see such a large sum of money appearing in your bank account, you’ll find yourself resisting the urge to spend it all at once during term. However, it’s a good idea to manage your loan and set budgets for yourself so you can cover times out of University, such as your summer break, and this’ll set you in good stead for life after graduation.
Your student loan is meant to cover everything including rent, bills, food, household goods and books. But, Future Finance suggests the average student will only be given around £3,000 per semester, leaving little left over in the pot.
Important: if you’re an international student studying in the UK you won’t receive any funding from SFE and will have to source your funding independently (NUS).
Five to six years of living expenses can have a huge impact on your bank, but there are also costs that many medical and dental students don’t consider.
- Travel to clinical placements
- Textbooks and equipment required for your degree
- Society fees and recreational expenses
- Maintenance expenses that the student loan doesn’t cover
- A few of the main expenses for junior doctors are highlighted in our blog which you can read here.
A survey from The Royal Medical Benevolent Fund (RMBF) found that 68% of students said that there were significant costs involved in studying medicine that they hadn’t anticipated before they began their course.
Respondents highlighted costs associated with living/travel whilst on placements (49%), accommodation (48%), professional clothing (39%) and conferences (34%) as difficult to manage during their medical degree.
So, how can you balance the books better?
In your penultimate and final years of study it’s good practice to be financially stable to ease pressures in FY1 and dental foundation training. For FY1, you will need to be registered with the GMC and GDC before you start working. The application for full registration with a licence to practise under the GMC for a junior doctor is £153.00 and can be up to £1,000 for the GDC, so that’s just one of the costs you should prepare for.
We all know that budgeting is important and although it may seem obvious, looking at your incomings and outgoings can help you prepare and identify potential saving opportunities.
But, don’t leave yourself cold and hungry; prioritise the essentials first and then factor in the cost of going out, as research from The BMJ has shown seven out of 10 UK medical students are cutting down on essentials such as heating, food, or professional clothes in order to economise.
Make it rain…
For more disposable income during your break, it’s worth considering a summer job, as 60% of students said they’ve experienced financial pressure during their medical degree (RMBF). Working during term time may seem an attractive prospect, but the last thing you want to do is overload yourself and fall behind on your studies.
Holiday work or occasional work such as University open days will help you build savings or paying off debts e.g. overdrafts without adding pressure to schedules. It’s also worth looking into job opportunities that relate to your career, for example, if you’re a dental student you could look at part time work as a dental nurse which could help you build your knowledge and experience of working in a practice and open future opportunities after graduation.
We’ve shared more useful tips about boosting your cash in our blog here.
Finally, if you have had financial help from family in the past, it’s a good idea to speak to them about your budget and see if they’re able to help. According to The Guardian, 71% of students said they rely on the bank of mum and dad.
Student Loan interest rates on the up…
The Department for Education has recently announced that from Tuesday 1st September 2020, the interest rates on student loans will rise for many students and graduates. Repayment thresholds, which set the minimum annual salary at which graduates start paying back their loans are also going to go up by hundreds of pounds, as of next April.
The interest rate you're charged, all depends on the type of loan you have, with the maximum rate rising from 5.4% to 5.6%, however there isn’t any need to worry about this, because the interest most people end up paying will actually be less than the amount that's added to your loan statement.
The repayment threshold will increase for most student loans as of the 6th April 2021 – which means you'll have to earn more before you start paying your loan back:
- Plan 2 loans:The repayment threshold will increase from £26,575/year to £27,295/year.
- Plan 1 loans:The repayment threshold will increase from £19,390/year to £19,895/year.
- Postgraduate loans: The threshold will remain at £21,000/year.
Interestingly, Helen Saxon, a banking expert from Money Saving Expert has said; ‘It's worth noting that most people, particularly those with Plan 2 student loans, will never fully repay their student loan before it gets wiped after around 30 years. So, the only people this really impacts are those with low borrowing or high income who will pay their loan off before it's wiped’.
We’re sharing more tips and advice on managing your finances during and after University in our latest articles. For more information like this, sign up to our updates here and follow us on Instagram and Facebook.