Your guide to student finance for undergraduates in the 2024/25 academic year

This year, we thought we’d update our guide to reflect how things have changed for students starting university in 2024 and what this might mean for you as a parent or grandparent.

Seeing as the Guardian reports that the vast majority of A-level students secured their first choice place at university this year, your child or grandchild may now be very excited about starting this new chapter of their life.

So, keep reading to discover our new guide to student finance for undergraduates starting university in the 2024/25 academic year.

Undergraduate tuition fees are charged at up to £9,250 a year

First, let’s go over tuition fees. These are paid directly from Student Finance England (SFE) to the university itself, and have remained largely unchanged since 2022.

To recap:

• Most universities in England and Wales charge £9,250 a year.
• For students studying in Scotland who are not originally from Scotland, the fees are likely to also be charged at £9,250. For Scottish students, there is no tuition fee.
• Northern Irish students will pay up to £4,750 a year if they study in Northern Ireland, while English, Scottish, or Welsh students studying in Northern Ireland will likely pay £9,250. Northern Irish students studying outside of Northern Ireland will normally pay £9,250.

The good news is that Tuition Fee Loans are not means-tested. As long as your child is eligible (for example, if this is their first degree and they are under 60 years old) they are likely to secure one. And, as you’ll read about later in this article, students can pay these back very slowly at a low cost.

Your child’s Maintenance Loan will be means tested

Unlike Tuition Fee Loans, if your child wishes to take out a Maintenance Loan from the government, this loan will be means-tested.

Maintenance Loans are paid directly from SFE to the student’s bank account at the start of each term, and are there to help cover:

• Accommodation
• Food
• Travel
• Socialising
• Clothing
• Any other living costs.

In the 2024/25 academic year, the maximum amount a student living away from home but outside of London can receive is £10,227 a year. If they’re studying in London and not living with their parents, they could receive up to £13,348 a year.

Students living at home can still receive a Maintenance Loan, but this will be capped at a lower amount than those with their own living costs.

When applying for a Maintenance Loan, a student starting university in September 2024 would need to:

• Provide their household income for the 2022/23 tax year. If they are under 25 and relying on at least one parent, their parent’s income would be combined, or one parent and their partner’s income if applicable, to form their total household income.
• Stipulate the degree they are going to study, along with other information such as whether the student has a learning disability.

For example, using the government’s Student Finance Calculator, imagine that:

• Your child is 18 years old and going to study a full-time degree that is not to do with teacher training, social work, or medical and dental training in 2024/25.
• They are attending a university outside of London and will not be living at home while they study.
• At the moment, they live with you and your spouse/civil partner and rely on you financially. Combined, your household income is £120,000.
• They do not have a learning disability or any other financial dependents, such as a child of their own.

In this scenario, your child would receive £4,767 a year as a Maintenance Loan.

As you may understand from these figures, your child’s Maintenance Loan is unlikely to be enough to cover all of their living costs, particularly if you and your partner or spouse earn a significant household income.

What’s more, UK Parliament reports that between 2022 and 2023, the average student’s monthly outgoings rose by 17%, from £924 to £1,078, or nearly £13,000 a year. As such, your child may choose to find a part-time job that earns them additional money throughout their degree, and you may decide to top up their funds yourself too.

Students may never pay back the full amount they borrow from the government

If you’ve been working out the sums as you read through this article, you may realise that your child is likely to finish university with a large amount of debt. The BBC says the average student graduates with £44,940 in debt.

As a parent or grandparent, this might make you nervous – after all, the last thing your child needs when trying to build a life and career is a huge amount of debt weighing them down. If you feel this way, it’s important to remember that repaying student loans is a gradual process that is unlikely to affect your child’s quality of life.

Plan 5 students (those starting an undergraduate degree after August 2023) won’t need to start repaying their student loans until they earn £25,000 a year or more, and any outstanding debt is written off after 40 years.

What’s more, the amount your child would repay each month after they begin earning enough can be as little as £8 a month, and will rise in line with their income.

Most students starting a degree in 2024/25 will pay back 9% of their income above £25,000. For example, if your child or grandchild starts a graduate job on £24,000, they will pay back nothing towards their student loans. If they earn £30,000 a year, they will repay around £38 a month.

So, while they may leave university with lots of debt, it’s unlikely to affect their ability to live a full, financially stable life in the future.

Financial planning can help if you’re planning to fund part or all of your child’s education

If you’re planning to provide funds to help your child or grandchild thrive at university, you’re not alone. A study by Save the Student found that on average, parents give their children £227 a month while they’re in higher education. Over three years, this amounts to more than £8,000.

However, if you’re shouldering costs of your own and thinking about retiring soon, helping your children out might alter the course of your financial plan. As such, financial planning can help you to work out your total contribution, where it might be best to draw the money from, and how you’ll give it to your child or grandchild.

To find out more about giving money to the adult children in your family while they’re studying, or to discuss any other financial matter, email hale@kelland.co.uk, or call 0161 929 8838.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All contents are based on our understanding of HMRC and current legislation, which is subject to change.

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