Advice on student loans

21 May 2014

John Lister, PET's Advice Manager, offers some clarity on student loans for prisoners:

"We've received some feedback from our learners concerned about the impact of getting in debt now they need to take out loans to pay for their university studies. This is in response to new legislation on higher education funding resulting in universities raising their tuition fees for new students. From 2014, the standard Open University (OU) fee for a new student will be £2,632 per year based on 60 points of study per year. 360 points are required for a full honours degree which will, therefore, take six years to complete in prison at that rate, and will cost over £15,000 in total.

Most prisoners are unlikely to have those kinds of funds available, but the majority will be eligible to apply for a student loan, which would enable them to defer payment of their university fees until after their studies. Prison education staff or PET can advise prisoners whether they meet the required eligibility criteria for getting a loan. Generally speaking, UK nationals who have not previously studied for a degree should be eligible for a loan. Student loans are not subject to a credit check either, so previous issues with debt will not affect someone’s chances of getting a loan. Also, loans for course fees in England do not count as income and therefore will not affect benefit entitlements.

Most prospective students in prison will be understandably wary of taking out a student loan for such a large amount of money, although the reality is not as bad as it first appears. Crucially, students will only start repayments if and when they are earning more than £21,000 per annum. The student loan repayments will be 9 per cent of any salary above £21,000.  Payments will stop if the salary goes below £21,000 and restart if it goes above. If a student never earns above £21,000, they will never have to pay a penny back and after 30 years, any outstanding loan will be written off. The amount that a person pays back depends on their earnings.  Once they have completed their degree and found a job with an income above the £21,000 threshold, they will begin to repay the loan.  So, for instance, with an annual salary of £25,000, you would pay 9 per cent of £4,000, or £30 per month.

 

Salary

 

Amount of salary from

which 9% will be deducted

 

Monthly repayment

£25,000

£4,000

£30.00

£30,000

£9,000

£67.50

£35,000

£14,000

£105.00

£40,000

£19,000

£142.50

£45,000

£24,000

£180.00

£50,000

£29,000

£217.50

£55,000

£34,000

£255.00

£60,000

£39,000

£292.50

However, even with this in mind, no-one should ever be rushed into taking on a student loan. As well as the financial obligations, it must be noted that you only get one chance to take out this kind of loan, so prospective students must be absolutely sure about the subject that they intend to study, and confident that they will be able to succeed in their studies whilst incarcerated. If in doubt students should speak to education or careers staff in prison, or they can write to us at FREEPOST Prisoners Education Trust."