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How student loans work: Student finance explained
Student loans play a crucial role in financing your higher education by helping to fund both tuition and maintenance fees. We’re here to give you the facts about student finance.
Starting university can be an incredibly exciting time but also quite daunting, especially when it comes to wondering about finances.
Student loans are designed to help you throughout your time of higher education by covering the costs of tuition fees and helping with the cost of living. Student finance also has reasonable repayment terms that won’t harm your credit score.
Overview
Most people working towards an undergraduate or postgraduate will use a student loan to fund their studies. There are 2 main types of student finance:
- Tuition fee loan – paid directly to your university to cover tuition fees.
- Maintenance loan – paid into your bank account to help cover the cost of living during your studies.
There are separate student finance organisations for England, Wales, Scotland, Northern Ireland, Jersey, Guernsey and the Isle of Man. Each has separate criteria with regards to how much funding applicants are eligible for.
You can apply for finance directly to these bodies via their website. The body you apply to depends on your residency, not where you’re studying.
Each body will set a deadline for applicants to ensure their funding arrives before the start of the academic year, although it’s possible to apply for funding up to 9 months after your course starts.
Am I eligible for student finance?
To be eligible for student finance, you’ll need to have been accepted to study one of the following qualifications:
- A first degree – for example, BA, BSc or BEd
- A Foundation Degree
- A Certificate of Higher Education
- A Diploma of Higher Education (DipHE)
- A Higher National Certificate (HNC)
- A Higher National Diploma (HND)
- An Initial Teacher Training course
- An integrated master’s degree
- A pre-registration postgraduate healthcare course
- A level 4 or 5 course with Higher Technical Qualification approval
- If you’re studying part-time, you could still be eligible for some funding, provided your “course intensity” is at 25% or higher.
If you’ve studied before:
You’ll usually only receive funding for your first higher education course, even if your previous course was self-funded. You may still be eligible for limited funding in some circumstances and for certain courses.
The same applies if you’re “topping up” an HMC, HND or Foundation Degree into an Honours degree. Funding may also be available if you hold a higher education qualification and are looking to begin a part-time Honours degree in engineering, technology, computer science or healthcare.
For further clarification, get in touch with your chosen finance body.
If I’ve changed my course, can I get finance again?
If you have stopped your course within your first year, you’ll receive the same funding for the same or new course when you return.
You might also get funding if:
- You suspended your course or withdrew before it finished but are going back to study.
- You’re repeating a year of your course at the same university, college or institution.
UK citizens
UK nationals or those with “settled status”, who have been living in the UK for at least 3 years, are eligible to apply.
Non-UK citizens
Non-UK citizens aged under 18 who have lived in the country for at least 7 years could also be eligible. Non-UK citizens over 18 can apply if they’ve lived in the country for at least half of their life or more than 20 years. Some EU nationals and those in the UK under various refugee statuses may also be eligible to apply.
Tuition fees: How much do they cost?
These figures apply to those whose course starts on or after 1 August 2016.
If you successfully apply for student finance, you’ll be granted 100% of your tuition fees per semester. That’s up to £9,250 per year if you’re studying in England, Scotland or Northern Ireland, up to £9,000 per year if you’re studying in Wales.
Eligible Scottish students studying in Scotland pay no tuition fees. The costs are completely covered by the Student Awards Agency for Scotland (SAAS).
Northern Irish students studying in Northern Ireland will pay a maximum of £4,630 per year. Tuition fees across the UK vary for international students.
Maintenance loans: How much do I get?
Maintenance loans are transferred into your bank account in 3 segments per year before the start of each new term and aid with your cost of living.
To be eligible, you’ll need to be studying for:
- A first degree – for example, BA, BSc or BEd
- An Initial Teacher Training course (degree level or above)
- An integrated master’s degree
- Some dental qualifications
In most cases, you’ll need to be living away from your hometown to qualify. The amount you get depends on your household income and where you’re studying.
For the 2022/23 academic year:
- If you’re applying to Student Finance England, you’ll receive up to £9,706 per year (or £12,667 if studying in London).
- If you’re applying to the Student Awards Agency for Scotland, you’ll receive up to £6,000 per year (if your household income is greater than £34,000). If your household income is less than £34,000, you’ll have to fill out a form to find what you are eligible for.
- If you’re applying to Student Finance Wales, you’ll receive up to £10,710 per year (or £13,375 if studying in London). Some of this funding may come in the form of a non-repayable grant worth at least £1,000 (or more for students from lower-income households).
- If you’re applying to Student Finance NI, you’ll receive up to £5,770 (or £6,780 if you’re studying in London).
For 2023/24 academic year:
- If you’re applying to Student Finance England, you’ll receive up to £9,978 per year (or £13,022 if studying in London).
- If you’re applying to the Student Awards Agency for Scotland, financial support available to undergraduate students will rise by £900 from the start of the 2023-24 academic year.
- If you’re applying to Student Finance Wales, all students will be eligible for the maximum loan of £11,720 if they live away from the parental home. Some of this funding may come in the form of a non-repayable grant worth at least £1,000 (or more for students from lower-income households).
- If you’re applying to Student Finance NI, you’ll receive up to £6,776 (or £9,492 if you’re studying in London).
Student loan repayment plans
When you start to repay your student loan and how much you repay will depend on your repayment plan. Don’t worry if you don’t know your plan – you can find out below.
If you applied to Student Finance England
1. If you’re starting your course on or after 1 August 2023, you’ll be on Plan 5 if:
- You’re studying an undergraduate course
- You’re studying a Postgraduate Certificate of Education (PGCE)
- You take out an Advanced Learner Loan
You’ll only repay when your income is over £480 a week, £2,083 a month or £25,000 a year before tax.
2. If you started your course between 1 September 2012 and 31 July 2023, you’re on Plan 2 if:
- You’re studying an undergraduate course
- You’re studying a Postgraduate Certificate of Education (PGCE)
- You take out an Advanced Learner Loan
- You take out a Higher Education Short Course Loan
You’ll only repay when your income is over £524 a week, £2,274 a month or £27,295 a year before tax.
3. If you started your course before 1 September 2012, you’re on Plan 1.
You’ll only repay when your income is over £423 a week, £1,834 a month or £22,015 a year (before tax and other deductions).
4. If you have a postgraduate master’s or doctoral degree, you’ll be on a Postgraduate Loan plan.
If you took out a Master’s Loan or a Doctoral Loan, you’ll only repay when your income is over £403 a week, £1,750 a month or £21,000 a year before tax.
If you applied to Student Finance Wales
1. If you started your course on or after 1 September 2012, you’re on Plan 2 if:
- You studied an undergraduate course of a Postgraduate Certificate of Education (PGCE)
- A Postgraduate Loan plan if you studied a postgraduate master’s or doctoral course
You’ll only repay when your income is over £524 a week, £2,274 a month or £27,295 a year before tax.
If you started your course before 1 September 2012, you’re on Plan 1. You’ll only repay when your income is over £423 a week, £1,834 a month or £22,015 a year (before tax and other deductions).
If you applied to Student Awards Agency Scotland
You’re on Plan 4 whether you’ve studied an undergraduate or postgraduate course. You’ll only repay when your income is over £532 a week, £2,305 a month or £27,660 a year before tax.
If you’ve applied to Student Finance Northern Ireland
You’re on Plan 1 whether you’ve studied an undergraduate or postgraduate course. You’ll only repay when your income is over £423 a week, £1,834 a month or £22,015 a year before tax.
How do I pay back my student loan?
Student loan repayments are deducted automatically via PAYE, or self-assessment if you’re self-employed. If you’re earning less than these thresholds, you’ll make no repayments. If the loan isn’t fully repaid after 30 years, it’ll be written off. (For Plan 1 loans, it might be written off after 25 years, or when you turn 50, depending on the start date of your course).
Understanding interest on student loans
The amount of interest you’ll be or are charged depends on your plan.
Currently, the interest rates are:
- 5.25% if you’re on Plan 1
- 6.9% if you’re on Plan 2
- 5.25% if you’re on Plan 4
- 6.9% if you’re on a Postgraduate Loan plan
- For Plan 5, the interest rate will be based on the Retail Price Index
The interest rate is calculated and will change in September of every year. It won’t change the amount you pay back per year, only the amount of time it takes to clear the debt.
Other sources of student finance
- Student bank accounts. Bank accounts tend to come with huge overdrafts (up to £3,000), which usually remain interest-free until at least a year after graduation.
Student bank accounts - Student credit cards. Used carefully, these cards can provide a useful buffer – if you clear your balance in full each month, you usually won’t pay any interest on your purchases. However, if you carry a balance from month to month, they’re not a cheap way to borrow.
Student credit cards - Student personal loans. Some loan companies market themselves exclusively to students, although the terms are similar to any type of personal loan.
Personal loans for students
Frequently asked questions about student finance
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