Should you choose a degree course with lower tuition fees?
Choose a university course because it’s best suited to you – not because a £7,500 course is cheaper than the £9,000 one you really want to do. Here’s why…
The figures can look pretty scary when it comes to student debt, but if you’re a Scottish student studying in Scotland, or taking a healthcare course funded by the NHS, you might get your course for free, whilst Welsh and Northern Irish students may pay less.
Over the repayment period, which for most will be 30 years, it will make very little (if any) difference to what you actually end up paying back; trying to cut costs by taking a cheaper course may not make financial sense. Here are some example scenarios to demonstrate why.
How tuition fees add up
If you’re a student living in England, you might pay up to £9,000 a year for your course (the average in 2014/15 is around £8,500). Even slightly cheaper courses can still add up to a lot. To illustrate the differences:
- £7,500 course fees: a tuition fee loan of £22,500 over three years
- £9,000 course fees: a tuition fee loan of £27,000 over three years
At this point, you’ve made a saving of £4,500 by taking the cheaper course. But, remember these two important points:
- The amount you pay back per year depends on your salary, not on the amount you borrowed.
- Not all graduates will have repaid the full amount of their loan by the point the remaining amount owed is written off. For English and Welsh students, that's 30 years after you graduate. A major review into university funding in 2010 estimated that this would be the case for 60% of graduates.
Either you’ll be lucky enough to be in the top group of graduate earners, or you’ll end up never having to pay back your full loan, so that £4,500 saving isn’t going to drastically alter your financial situation.
If the course of your dreams costs more, then the repayment system works so that if you happen not to be in high-earning work after your course, you won't have to repay much – or anything at all.
Maintenance loans move the goalposts
Note that following the July 2015 Budget, maintenance grants will be scrapped for students beginning their studies in Sep 2016. These will be replaced completely by maintenance loans, with the amount which students can receive being increased. Read more about these changes in our key guide to student finance in England.
When you factor in taking out a maintenance loan, the other part of your student loan that covers living costs, this is even more apparent. The amount you receive will depend on your personal and family circumstances and where you live, but here are a couple more scenarios (for students funded by Student Finance England):
- £7,500 course fees: £22,500 tuition fee loan + £10,702 maximum maintenance loan per year for London students over three years = £54,606
- £9,000 course fees: £27,000 tuition fee loan + £8,200 maximum maintenance loan per year for students outside London for three years = £51,600
In this case, the student on the £9,000 course will actually owe less than the London student on a £7,500 course. And even then, the student living outside of London could end up paying back more, less or the same overall anyway, depending on their earnings over 30 years.
Of course, it's difficult to predict what will happen 30-odd years from now but the repayment system means you won't have to pay back money if you don't earn a great deal. So don’t be put off choosing a course because of a higher price tag – it's more important to choose the course that's right for you.