As discussed in the previous article, it's nearly impossible for many students to attend an institute of higher education without getting into some degree of debt. The following outlines the other major aspect that comprises the typical student loan, the maintenance loan. A maintenance loan is intended to cover the living costs of those on full-time undergraduate courses and also those on initial teacher training courses. This loan will help cover rent, council tax, utility bills, insurance, travel, groceries, clothes and any other living costs. Similar to a tuition loan, a portion of the maintenance loan is offered to all students and entitlement to any more is based on household income. These loans are paid directly to the student in three instalments throughout their education, unlike the tuition loan which is paid at the beginning of each academic year. Maintenance grants for those on part-time courses work in a similar way to part-time tuition grants, with a maximum of 250 available for those in England and Northern Ireland and 1,025 for those in Wales. Both of the loans discussed comprise what is commonly referred to as a "student loan". The interest rate of both is much less than that of conventional personal loans and unlike such loans, which may have fixed interest rates, student loans are linked to the rate of inflation. This means that the total amount to be repaid will be the amount of the initial loan, plus the interest incurred over the years the loan is outstanding. This ensures that the amount owed will remain the same value as the amount borrowed. Repayment of the loan does not begin until the account holder has left higher education and is in earnings exceeding 15,000 a year. This form of repayment is known as Income-Contingent Repayment, as it bases the repayments on the accounts holders' annual gross income. Supposing the account holder is covered by the UK Tax system, usually defined by whether or not they have a National Insurance Number, then repayments are deducted by their employer(s). If not covered by the UK Tax system, then their earnings are calculated and a repayment schedule is set up and requested from the account holder.
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