Student loans

No matter how hard you budget as a dental student, and how much you take advantage of all the available awards on offer, it’s fairly safe to say that at some point in your course you will consider taking out a loan.

To qualify as a dentist you have to spend a minimum of five years at university and this can take its toll on your finances. Only those with exceptionally generous parents can afford to finish their studies debt-free and, with the option of getting a well-paid part-time job severely limited due to the 9-5 nature of a dental course, student loans are a subject you need to get to grips with fast.

However, it isn’t all doom and gloom. Loans don’t have to be all bad and as a budding professional you will find that the banks look favourably upon you, seeing you as a good bet. This means that they are likely to offer you good rates of interest and terms that they wouldn’t be inclined to offer your art student friends.

The first port of call is the Student Loans Company. This is an organisation that works in partnership with local authorities and the Department for Education and Skills to provide students with extra funding when needed. The interest rate on student loans is linked to the rate of inflation, so in real terms you only repay the same amount as you borrow.

There are two kinds of loan that new and existing students can apply for:

• Student loan for fees

• Student loan for maintenance.

A student loan for fees will cover the full amount of your fee contribution and so can be helpful for those who have trouble making these payments. The loan for maintenance is to help pay your living costs during term times and holidays.

The amount you can borrow will depend on factors like your household income, where you live while you are studying and how much maintenance grant you receive. You can apply for around 75 per cent of the student loan for maintenance regardless of your household income (‘non income assessed’). Whether you can apply for the remainder will depend upon your household income (‘income assessed’).

Repayments on your student loan are due from the April after you leave your course, which is the start of the new financial year. You have to repay nine per cent of your earnings over £15,000 (or the monthly or weekly equivalents). Therefore, the more you earn, the faster you repay the loan. These loans are generally considered the best option for students that are in need of some financial support. It should be your first port of call as it offers the best terms and conditions and won’t be beaten by a bank.

However, if you have exhausted your student loan options don’t panic, because as a dental student you can take advantage of the many professional loans that banks offer students who are studying for a vocational degree.

For example, Natwest offers a Professional Trainee Loan Scheme which offers you up to £20,000, which you don’t need to make any repayments on whilst you are studying. In fact, you don’t have to make repayments for at least six months after you finish your course, which gives you a little breathing space and a chance to sort out your finances.

The loan is useful because it is reasonably flexible and so can respond to your needs. For example, you can draw the loan in one lump sum or installments, you can choose a fixed or variable interest rate and you don’t have to pay any arrangement or administration fees. You can also schedule repaying the loan over 10 years so you don’t have a shock half way through your VT year.

So what can you do with all this money that is available? Well, the first thing is to think carefully about why you want it in the first place. Just because the money is available doesn’t mean you have to take advantage of it.

Focus on the fact that it is a loan, not a gift, and although graduation and your working life seems a long way in the future, you will have to pay it back. Also, the amount of debt that you accrue now may have an impact on your future career choices.

If you are using up a good proportion of your earnings paying back student debt then you may not be able to spend three years specialising, as initially it doesn’t pay as well.

If you harbour ambitions of becoming dually qualified, you may need to think about the financial implications before rushing to the bank manager’s door. The main message is to think before you act and use your loan money wisely – you’ll be thankful you did in the long run.

For further information on the options outlined above, visit the Student Loans Company at www.slc.co.uk or Natwest (www.natwest.com), while student finance information can also be found at www.direct.gov.uk.

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