Students To Benefit From New Government Loan Scheme

Aug 26, 2011   //   by sam   //   Money Saving Tips  //  1 Comment

With the implementation of a new government loan system, student account holders are set to benefit greatly according to one expert.

In a recent move, the coalition government has unveiled changes to how scholars will go about repaying their loans taken out during their time at university.

These new changes – which are likely to come into effect next year – will mean that only the high earners will have to repay the full amount of their student loan. Remaining debts will be written off three decades after an student has finished their degree course.

Ed Bowsher, head of consumer finance at Love Money, said this represents a “big plus-point” for those embarking on higher education in the near future.

However, he also warned that this scheme will also result in ex-students paying interest at “rates higher than inflation”.

This comes after an official from Moneyfacts noted that parents could help their children going into higher education by saving cash before they leave home.

Parents that want to help their children before they head off to university by placing money into a savings account have a number of options to consider.

Following the decision last year to allow universities to charge up to £9,000 per year in tuition fees, many student account holders may find it increasingly difficult to pay for their degree in the long run.

Research published last week by Standard Life came to the conclusion that many parents fear that their offspring will come out of university sadled with debts of up to £40,000.

Taking this into consideration, many parents are now wondering how they can offer monetary assistance to attendees. The specialist went on to note that there are many suitable products for this task.

In addition, an expert from Moneyfacts has supported this by offering some advice to parents.

“There are regular savers accounts that are pretty good for that sort of thing,” she said.

“A First Direct or HSBC current account can get as high as eight per cent.”

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  • Stuart Parrot

    I’m still shocked at the huge fees that students will have to pay out! These loans may help them to get into University, but in most cases they will be paying them off for many years to come. I found it hard enough to pay off the overdraft on my student account let alone the loan I borrowed to fund my living for 3 years.

    Makes you wonder how many students will be going to study on courses that don’t offer student many prospects after uni – not mentioning any in, ahem…