It’s perfectly normal to drop out of university. You aren’t alone. In fact, 1 in 16 students in the UK drops out of uni after the first year, according to the Higher Education Statistics Agency (HESA). So if you’re sure of dropping out, we bet you must be thinking of something. What happens to my student loan if I drop out from the UK? This will be answered in this article. Also, if you are looking to secure an education loan for your overseas studies, head over to UniCreds to get the safest and most reliable education loans.
Note: The following information is applicable for Student Loans provided by the Student Loans Company to students in England, Wales and Northern Ireland.
That’s why we’re here to answer that question and more. But first..
What Is A Student Loan?
In the simplest terms, a student loan is a mixture of grants and loans. Are you confused between the 2 words? Let us simplify it for you.
Grants = You don’t have to repay
Loans = You have to repay.
Much better now, isn’t it?
Your student loan is all the repayable funding you apply for AKA Tuition Fee Loan and/or Maintenance Loan.
How Much Money Will You Owe?
The moment your university confirms your withdrawal with the Student Loans Company, all future Student Finance payments will be stopped. A quick fact to know is that the average student loan debt in the UK is about £35,000.
Tuition Fee Loan
This is a part of your Student Finance that covers the cost of your degree. It is paid directly to your university in 3 separate instalments annually. The first 50% of the total amount borrowed will be paid in the two instalments at the start of the first and second terms respectively. The remaining 50% will be paid at the start of term three.
Currently, you can get a maximum of £9,250 per year towards your tuition fees. Make sure you double-check how much you have taken out this year and any previous years. This will be the amount you will have to pay back (minus the fees for terms you haven’t yet completed) plus added interest.
It’s worth remembering that even if you drop out halfway through, you will still be charged for a full term.
This covers your day to day living costs. You will receive your maintenance loan payout directly in your student bank account in three instalments during the year. One at the start of each term. The Maintenance Loan is officially split into three parts of 33/33/34.
How much Maintenance Loan you are entitled to, depends on your household income and living situation. That means how much money your parents make and whether or not you are living at home, away from home outside London, away from home and in London or you spend a year of a UK course studying abroad will determine the extent of your Maintenance Loan.
|Full-time student||2019 to 2020 academic year||2020 to 2021 academic year|
|Living at home||Up to £7,529||Up to £7,747|
|Living away from home, outside London||Up to £8,944||Up to £9,203|
|Living away from home, in London||Up to £11,672||Up to £12,010|
|You spend a year of a UK course studying abroad||Up to £10,242||Up to £10,539|
Check how much of the Maintenance Loan you have taken out in the previous years to figure out how much you will have to pay back. Keep in mind that you will have to pay a small interest amount.
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Grants and Bursaries
There is a possibility that you may have received a bursary or grant on top of your Maintenance Loan or Tuition Fee Loan, such as Disabled Students’ Allowances (DSA). Your university also must’ve bestowed some sort of grant or scholarship on you.
In general, they do not have to be repaid, but you are entitled to them only as long as you are an official student at a university.
You must make it a point to let your university know the exact date you decide to terminate your studies to avoid having to pay back any money you weren’t entitled to and may have spent in the meantime.
If you have received a grant or bursary from any other source, make sure you speak to them and convey your decision to leave university.
Along with tuition fees, accommodation takes a huge chunk of your student budget. So, it’s only natural that you try to recoup as much money as you can when you decide to drop out of university. You might be bound by a contract for your student accommodation. This means that you are likely to be liable to pay rent, possibly for the whole academic year.
If you book your accommodation through UniAcco, you have the option of finding a replacement student to continue your tenancy at no extra cost. This facility will allow you to save a lot of money.
Student Loan Repayments After You Drop Out
You will have to start repaying your student loan once you have withdrawn from your university.
Your repayment starts from the April after you withdraw from your course. The great part is that you have to start repaying only after you start earning over the repayment threshold. In case your income drops lower than the threshold limit, your repayments will stop as well.
For instance, in case you decide to drop out of university at the end of the second year of your undergraduate degree, you are liable to repay your student loan only after you start earning over the threshold limit of £26,525.