New Way to Plug the Funding Gap; Advertising FeatureStudent Loans, the Bank of Mum and Dad, Banks and a Part-Time Job Only Go So Far. That Is Why Future Finance Was Started, to Help Undergraduate and Postgraduate Students Finance Their Futures

The Evening Standard (London, England), October 14, 2014 | Go to article overview

New Way to Plug the Funding Gap; Advertising FeatureStudent Loans, the Bank of Mum and Dad, Banks and a Part-Time Job Only Go So Far. That Is Why Future Finance Was Started, to Help Undergraduate and Postgraduate Students Finance Their Futures


Byline: NIKI CHESWORTH

AFTER six years working as a consultant, Amy*, 28, has decided to study for an MBA at a university just outside London. She needs PS32,500 to cover her tuition and living costs for the year-long programme. It is expensive but she believes it will be worthwhile -- after all, there is a large postgraduate premium and her MBA should more than pay for itself in higher earnings.

But with no student loans for postgraduate study, where can she go to find the finance when she will not be working? This is why Future Finance has been set up to fill the funding gap, not just for postgraduates but for undergraduates too, who usually find that student loans, bank overdrafts, parental support and part-time earnings only go so far.

As Amy has a good credit record, she will pay LIBOR plus 10.8 per cent (or 10.95 per cent in total) interest while she studies (paying only a monthly maintenance charge of PS75) which drops to LIBOR plus 8.9 per cent (or 9.05 per cent in total) on graduation.

Amy will also have to pay a 6.5 per cent origination charge of PS2,112.50 to borrow her PS32,500, which will be added to her loan, but what makes it more affordable is not the rate but the term. By spreading repayments over 10 years (although she can repay the loan earlier if she wishes) her monthly outgoing for her MBA will be PS470.61 a month after graduation, something Amy believes she will be able to afford as her earnings are expected to rise significantly.

"We're very excited about launching Future Finance in the UK, which provides an affordable source of finance for students who want to invest in their future. If you go to a bank you generally need a job, and you have to repay the loan in three or five years so the repayments are much higher and they are unlikely to lend as much as PS30,000 unsecured," says Future Finance CEO Brian Norton. "Our loan repayments are spread over 10 years, although you can repay at any time with no early repayment fees, which reduces the monthly cost."

So how does Future Finance work? The basic requirements are that undergraduate and postgraduate university students in the UK must be 18 years of age or above and a UK or EU citizen normally resident in the UK. If they do not have a two-year income history, they will need a guarantor (a person who agrees to pay the loan if you default) which is usually a parent (who will also be subject to a credit check).

The student can borrow between PS2,500 and PS40,000 per academic year (postgraduate programmes can be particularly expensive) to pay towards tuition fees and living costs.

Interest rates are variable based on LIBOR plus an additional interest rate but a typical undergraduate would pay between 10 and 15 per cent interest while in university and between eight and 13 per cent upon graduation, depending on their credit score. …

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New Way to Plug the Funding Gap; Advertising FeatureStudent Loans, the Bank of Mum and Dad, Banks and a Part-Time Job Only Go So Far. That Is Why Future Finance Was Started, to Help Undergraduate and Postgraduate Students Finance Their Futures
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