Martin Lewis, money saving expert, is well known for offering tips and tricks through his eponymous Money Show, live on ITV. In the latest installment of the popular program, Martin spoke to two families who were sending their teens to college in September. While many worried about the financial implications of student debt, Martin actually pointed out another issue that many don’t realize.
While student loan repayments are important in the long term, in the short term, many people will consider maintenance loans for their youngster.
A maintenance loan means that students can receive funding for their daily expenses, and the payment will often help young people cover the cost of their grocery store and the rent on their housing.
The amount of money a person receives from a maintenance loan, however, is means tested, as Martin explained.
He said: “Loans for life or maintenance are based on your household income.
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As a result, Martin explained, if income has fallen by more than 50% for the upcoming tax year – 2021/22 – then parents or guardians can request what is called a year-in-year assessment. Classes.
This will take into consideration a family’s current income level and base the maintenance loan on that amount of money.
However, Martin went on to highlight some of the “hidden” costs for parents that can be associated with a student loan.
It will be important for parents to take note of this, he said, even years before they send their children to college.
“So I define the parental contribution, and I’m not saying you have to do it, as the full loan that you would get minus what you are told you have.
“The difference, because of the income, is the parental contribution.
For those who might be surprised by the parental contribution element of the student loan, Martin urged action.
Even for those with young children, making a concerted effort to start saving now could mean less financial stress in the long run.
Putting money aside, perhaps in a dedicated savings account, Martin said, may be an appropriate measure.
Martin Lewis is the founder and president of MoneySavingExpert.com. To join the 13 million people who receive their free weekly Money Tips email, visit www.moneysavingexpert.com/latesttip