Advice for parents on student finance

Living on a low income is one of the key things your child will learn at university, but parents can do their bit to help

Most young people leaving home to go to university will be managing their finances for the first time. So what do they need to know – and how can you, as a parent, help them?

The major source of financial support for students is a maintenance loan, which will be paid back in instalments once they have graduated and are earning more than £21,000 a year. Students can apply for loans through the DirectGov website and it's a good idea to do this at the same time as making an application for university. If students apply later than 31 May 2014, there is no guarantee the money will be in place by the start of term.

The maximum loans available are highest for those studying in London and not living with their parents (£7,675). They are lower for those studying outside of London (£5,500) and lowest for those living with parents (£4,375). (These are 2013 figures – the figures for 2014 have not yet been published.)

Not everyone will receive the maximum loan. In England and Wales, only 65% of the maximum is guaranteed, and what a student receives after that is dependent on household income. If household income is more than £62,125, students will only receive the guaranteed loan and parents will be expected to top up that. If your child wants to apply for more than the guaranteed loan, you must provide evidence of household income.

Students from poorer households (those with an income of less than about £40,000) can also apply for a maintenance grant. The maximum grant is £3,354, awarded if the household income is £25,000 or less. Unlike loans, grants do not have to be paid back. Students who receive a grant will have the amount of their loan slightly reduced.

For most students, budgets will be tight. There are other sources of funding available, however. A bursary from the National Scholarship Programme may be available to students from households with an income of less than £25,000 a year. The bursary is worth £3,000 for the first year, though no more than £1,000 will be paid in cash – the rest will be paid in the form of a tuition-fee discount or payment in kind (such as a bus pass or book allowance). The NSP is set to change in 2015-16.

Some universities also offer bursaries or academic scholarships for students on certain courses. Students apply directly through the university and details will be available on the university website.

Disabled Student Allowances are available to students with particular disabilities or mental health conditions – the amount varies depending on the student's needs.

Surviving on a low income is a challenge. David Ellis, editor of Student Money Saver, suggests one area where parents could help is in choosing accommodation – he advises shopping around because the difference in cost can run to thousands of pounds a year. Ellis believes parents need to help their children to plan their spending before they start their course and agree who (the parent or student) will take responsibility for each item: "The most helpful thing a parent could do is to teach their child some basic budgeting skills and a realistic sense of how much things are worth."

The bank of mum and dad

Maighread Hegarty's daughter, Alex, is about to enter her final year at Mountview Academy of Theatre Arts in north London. Alex receives a student loan with London weighting and an annual student grant of about £600.
Hegarty and her ex-husband both pay a monthly sum into Alex's bank account to cover her rent, which is £415 a month. Fortunately, the house Alex rents with other students is within walking distance of the college, so there are no additional transport costs. Money has to be found, however, for dance shoes and clothes, as well as "military quantities of black tights".

The most testing time, says Hegarty, is during the holidays, when there is no loan coming in, but accommodation costs still have to be covered: "In her first year, the contract on her first house was finishing in August, with the next one also starting in August, so for July we were paying rent on one and a deposit on the other, which was £800."

Extra cash and tips for thrift

These websites offer alternative sources of funding or tips to make the money last …

Apply for loans and grants (England)

Student Finance England
Student Finance Wales

Student Finance Northern Ireland

Student Loans Company

Scholarships and bursaries

Disabled Students' Allowances

Student Money Saver

The GuardianTramp

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