National Careers Service Advisers briefing - Advanced Learner Loan

Briefing for National Careers Service Advisers

The following was originally a PDF document held on our previous site, it contains information created specifically for National Careers Service Advisers in relation to Advanced Learner Loans.

Introduction

This briefing provides National Careers Service advisers with an overview of Advanced Learner Loans (Loans).

It gives advisers core information on Loans to support them in making eligible individuals aware of this source of funding.

From 1 August 2016, Advanced Learner Loans will be available for Learners aged 19 and over to help them pay for courses from Level 3 to 6.

Policy context

Loans will be available for eligible learners aged 19 and over studying at Levels 3 to 6 (Level 3 and 4 only if their course begins before 1 August 2016). Learners aged 19 to 23 studying their first full Level 3 qualification are still entitled to grant funding. They can choose to fund their first full Level 3 qualification with an Advanced Learner Loan, but they must be made aware that if they do so, they’ll lose their entitlement to grant funding.

Loans will give individuals wishing to study at Level 3 and above access to financial support for tuition costs similar to that which is available in higher education (HE).

This means that rather than an individual having to pay for their course upfront, they have the option of accessing a Loan from the Student Loans Company (SLC). They will only start to repay the Loan once they have left the course and are earning over £21,000 each year.

Helping the customer to take responsibility

It is not the role of the National Careers Service to advise individuals regarding financial products.

Research suggests that individuals using a Loan to pay for their courses are more discerning over their choices. It is then possible to encourage individuals to ‘shop around’ to seek out the best course, location, price and quality, depending on their requirements.

It is important that individuals consider their own circumstances and look into all options for paying for their course before choosing to take out a Loan.

Learner communications/materials

Learner materials are available for colleges, training organisations and National Careers Service advisers to use with individuals looking to take out a Loan; they can access these at the following websites:

• www.practitioners.slc.co.uk/supporting-materials
• gov.uk/advancedlearnerloan
• moneyadviceservice.org.uk

Benefits of Loans for the learner

Loans will have the following benefits for individuals:

• Positive terms and conditions (no upfront cost; low real rates of interest; no repayment until the individual is earning £21,000 or more; fixed repayments of 9 per cent above £21,000 earnings threshold, regardless of Loan balance; and any outstanding Loan balance written off after 30 years).
• Higher quality, more bespoke learning programmes with stronger labour market outcomes, from colleges and training organisations that need to demonstrate the quality of their offer.
• Those who are qualified at Level 3 and above experience benefits, including increased wages, compared to those who are not similarly qualified.
• Those who access a Loan to support Access to HE courses (should they progress to HE), will have the amount outstanding on the Loan for their Access course written off on completion of their HE course.

Overview of eligibility for Loans

To be eligible for a Loan a learner must be:

• aged 19 or over on the first day of their course.
• living in the UK on the first day of their course and have lived in the UK, the Channel Islands or the Isle of Man for three years immediately before this.
• studying with a college or training organisation in England approved for public funding; and studying an approved qualification.

From 1 August 2017 if a learner is not resident in the UK, they may still be eligible for an Advanced Learner Loan if they are:

• a serving member of the UK armed forces; the spouse;
• civil partner of a serving member; or
• a dependent parent living with a serving member

If an individual is unsure of their eligibility, their chosen college or training organisation will be able to assist them.

Qualifications eligible for Loan funding are defined in the FE Loans Regulations and detailed below:

• A number of A-levels/AS, not greater than four.
• A Quality Assurance Agency (QAA) Access to HE Diploma.
• Level 3-6 Vocational Qualifications.

Application process

Before making an application individuals need to contact the college or training organisation where they wish to study and receive an offer of a place on their chosen course.

The college or training organisation will provide the individual with these details in the form of a Learning and Funding Information Letter.

Individuals will be able to apply for a Loan online or by a paper-based application form.

For an application to be processed the following information is required:

• course they wish to study;
• college or training organisation where they wish to study;
• tuition fee the college or training organisation is charging them; and
• amount of Loan they wish to take out.

Applicants will also need to provide personal details (name, address, and so on) and evidence to confirm their identity. For UK passport-holders this will be valid UK passport details (not a physical passport).If the applicant is a UK national but does not hold a passport they will be asked to provide another form of evidence. If an individual is not a UK national they will need to provide physical identity evidence, as well as evidence that they are a permanent resident in the UK.

All applicants will need to provide a valid national insurance number. If they do not have a national insurance number they can still apply for a Loan, and Student Finance England (part of SLC) will contact them to instruct them how to obtain one. This may mean that an individual would need to arrange an appointment with their local Jobcentre Plus for them to assign one.

An individual can have a maximum of four Loans over their lifetime. Individuals can use these four Loans for any combination of the eligible qualifications. The exception to this is where an individual undertakes a programme of A-levels, where they are entitled to apply for up to a maximum of four loans for an A-level programme comprising individual AS or full A-levels in any combination. Individuals can make these applications at the same time or one after the other. A learner can still apply for three more Loans for learning aims that are not AS/A-levels.

Interest

Interest will be charged at the Retail Price Index (RPI) +3 per cent during the period of study, and up until the April after a learner leaves their course. From this point interest is linked to earnings and will be:

• RPI for those earning less than £21,000 a year, on a sliding scale between RPI and RPI +3 per cent for earnings between £21,000 and £41,000 a year.
• RPI +3 per cent for individuals earning more than £41,000.

Payment process

The amount a learner can take as a Loan depends on their course, the tuition fees charged by the college or training organisation, and maximum amounts set by the government.

The minimum Loan amount is £300. An individual can take out a Loan for the maximum amount to cover the tuition fee or can pay all, or part, of the tuition fee themselves.

Student Finance England (SFE) will pay the agreed tuition fees to the college or training organisation once they receive confirmation of attendance on the course from the college or training organisation.

Repayment

Repaying an Advanced Learner Loan is straightforward.

An individual’s monthly repayments will be based on their income, not what they borrowed.

They will only start making repayments when their income is more than £404 each week, £1,750 each month or £21,000 each year.

They will only pay back 9 per cent of any income above £21,000 a year (see the table below for examples of what will be repaid):

Income each year before tax	Monthly repayment
Up to £21,000	Repay £0
£22,000	Repay £7
£25,000	Repay £30
£35,000	Repay £105
£40,000	Repay £142

If an individual’s income falls or rises (for example, if they receive a bonus), the repayment amount will automatically change to reflect this. Individuals can make voluntary repayments at any time to pay off their Loan more quickly.

If an individual is self-employed they will be responsible for making Loan repayments as part of their annual self-assessment tax return.

If an individual is employed, they do not need to do anything. Their employer will take their repayments directly from their salary as they do with tax and national insurance contributions.

If an individual stops working or earns less than £21,000, their repayments will stop and only start again when their income is more than £21,000 a year.

Repayments will start in the April after the learner leaves or finishes their course.

Any Loan remaining 30 years after an individual is due to start making repayments will be written off.