Everything you need to know about student loans

student loan advice

Updated 15/9/2014

The information below is correct for British students studying at an English uni. Things can be different elsewhere:

Well, the truth of it is: tuition fees have ballooned like Jessica Simpson (anyone remember her?) after a break-up and the maintenance loans are completely inadequate. That's just how it falls and despite their faults, student loans remain an absolute necessity. An absolute necessity which is, inexplicably, surrounded in myth and conjecture - but this guide should clear things up.

It's important to stress that the loans are repayable and you will be able to cope- they've been designed specifically with students in mind. If the £9,000 tuition figure is putting you off, it shouldn't be.

What loans are available?

There are two main student loans available:

  • A tuition loan, which is to cover the cost of your course.
  • A maintenance loan, which is to help cover living costs (rent, food, socialising…)

It’s possible to apply for both or just one. See below for the details of both.

Grants and other support

You may also be entitled to apply for a grant (which is money you don’t have to pay back unless you leave your course early.) The most common grant is a maintenance grant and full-time students whose household income is below £42,620 are eligible to apply.

Note that for every £1 of grant you are given, your maintenance loan is reduced by 50p. This may seem duplicitous by the government ('are they trying to help me or not?!') but as grants do not have to be paid back, the idea is to reduce the debt burden on those who are eligible for extra support. The table below gives you an idea of what you may be able to get, based on a student living away from home and studying outside of London, but for a more personal insight, visit this page.

Household Income Maintenance Loan
Maintenance Grant (doesn't need to be repaid) Total
Less than £25,000

£3,862

£3,387 £7,249
£30,000 £4,335 £2,441 £6,776
£35,000 £4,808 £1,494 £6,302
£40,000 £5,282 £547 £5,829
£42,620 (cut off point for maintenance grant eligibility.) £5,530 £50 £5,580
£61,528 + (above this, everyone gets the same amount: £3,610.) £3,610 £0 £3,610

Between a household income of £42,620 and £61,527, how much maintenance grant you could get depends on what your household income is. To check, use this calculator.

If you household income is below £25,000, you may be entitled to apply for the National Scholarship Programme. This won't affect your other loans (unlike the maintenance grant) and you could receive up to £1000 and have you fees waived. Details about the National Scholarship Programme can be found here.

You may also win a scholarship or bursary depending on your course and your grade achievements but you should receive information about this on application and more popular courses, such as law, do not offer them. Again, these aren’t repayable unless you leave your course early.

If you have a disability or any dependents (children or adults who financially rely on you) you may also receive extra financial help, which you won’t have to pay back. Details on disabled student allowance (DSAs) can be found here. Details about the childcare grant can be found here.

You can get an idea of what you’re entitled to by having a look at this page.

Who Am I Borrowing From?

You’ll deal with the Student Finance England and the Student Loans Company (for practical purposes, they're the same company), who are owned and funded by the UK Government.They are a not-for-profit organisation.

How Much Is Available for Tuition Fees?

Student Status

Maximum Loan (yearly)

Full Time Student

£9000

Part Time Student

£6,750

(To qualify for a loan as a part time student, your course must cover at least a quarter of the material a full time course gets through in a year.)

Your institution will tell you how much your course costs - and they will be very up front about it. The maximum a UK university can charge is £9,000 per year, except for Welsh students, who won't pay more than £3,465.

Universities in Scotland are free for Scottish students, but charge the full amount for a student coming from elsewhere. Northern Irish students pay £3,465 per year for their education in NI, though students from other parts of the UK will pay the full amount.

You will never pay for your education up front.

If your University is private – basically, if you go to the University of Buckingham or BPP—then the fees are slightly different. Full time students at full time at one of these two are only entitled to receive up to £6,750 while their part time equivalents can receive up to £4,500.

How much is available for maintenance loans?

This loan comes in three parts throughout the year: If your course begins in September, you'll get the first instalment in September, the second in January and the third in April. If your course begins in January or February, you'll get the first in Jan/Feb, the second in April and the third in September.

How much you get depends on your household income (see the table above). However, this table should fill you in:

Where you live/study How much you can get
Live at home £4,418
Living away from home, studying outside of London £5555
Living away from home, studying in London £7751
A year abroad as part of your course £6600

For full details, see this page.

Why is it different for peeps in London?

Our delightful capital is disgustingly expensive. The average student rent in London is around £180 weekly, whereas in Sheffield the figure is closer to £85.

What happens if my course takes me abroad for a year?

Pass ‘go’ and collect a maximum of £6,600. Upon application, the Student Loans Company will ask whether you are studying abroad and any maintenance loan will be increased automatically for the appropriate year of study. Which is just as well, seeing as all those jugs of Sangria won’t buy themselves.

Do I get the same amount each year?

No, unlike your tuition loan, you will receive slightly less in your final year. In the first years of a course, students are lent enough to see them survive the summer but Student Finance expect all students to slip into full time employment (if only!) once they leave uni, so in the final year the loans company only deposit enough to see students though to the end of their final term, rather than through the summer too.

When do I get the money?

Once your place on your course is confirmed, the tuition loan is paid directly to your University or College, so you never see the money in your bank account. This means the process of paying your course fees becomes relatively hassle free.

How and When to Apply

The sooner the better! You can apply for student finance at any time, up to nine months into the first academic year of your course. You can’t apply once this deadline passes.

To start your application, visit this page. You’ll need to make an account with Student Finance, fill out their forms and provide any evidence needed (for example, household income) and then sign and return the forms they send to you.

When does the money have to be paid back?

You won’t start repayments until the April after you graduate and until you earn a salary of over £21,000.

In lending the money, the Government’s intention isn’t to make a profit and they subsidise the interest rate to make it more payable. However, you are now charged more interest than ever before, which is extremely unfortunate.

Income Rate of Interest
While Studying Rate of Inflation +3%
Earning under £21,000 Rate of Inflation
Earning between £21k - £41k Rate of Inflation + (up to, depending on income) 3%
Earning over £41,000 Rate of Inflation + 3%

If you are not earning, you will be charged interest but you will not need to pay it back.

Sometimes the rate of inflation is referred to as the ‘RPI’ or ‘Retail Price Index’. Don’t let it confuse you.

If you aren’t earning above £21,000 you won’t have to repay anything –including if you’re unemployed and on benefits. Once you earn anything over this, you’ll pay 9% of the figure above £21,000 –this table should help to clarify how the process works:

Income Monthly Repayment The Maths
Under £21,000 Nothing. N/A
£25,000 £30 £25,000 is £4,000 more than £21,000, so you pay 9% of £4,000, which is £360. £360 divided by twelve is £30.
£30,000 £67.50 £30,000 is £9,000 more than £21,000 so you pay 9% of £9,000 which is £810. £810 divided by twelve is £67.50
£40,000 £142.50 £40,000 is £19,000 more than £21,000 so you pay 9% of £19,000 which is £1,710. £1,710 divided by twelve is £142.50

With a bit of luck, that should all make sense and you should be able to work out what you should be repaying from using the method in ‘The Maths’ column.

If you receive any disability benefits they will not count as ‘income’, even if they are taxable.

How do repayments work?

You have an obligation to let your employer know you have a student loan to pay off. They will then calculate the amount you owe and deduct it from your salary, which means you’ll be paying back through the tax system. You should keep an eye on your pay slips to ensure you’re repaying the right amount but other than that, you’ve got off lightly!

If you’re self-employed, make sure you have a calculator or an accountant. Preferably an accountant with a calculator. If you’re self-employed, you’re one of the chosen lucky few who have to figure out a repayment plan by yourself.

How quickly the loan is paid off is dependent on how much you earn. The student loans company will send you a statement every year, though, so you can keep on top of how much you owe. And if you’re really keen, you can always keep up to date with your balance online.

Whenever your salary drops below £21,000, the repayments stop. So if you take a pay cut or fancy a year out and are no longer being paid, there will be no repayments provided you don’t earn over £21,000.

If you are unable to pay off the full amount in twenty-five years, any outstanding balance is written off if you EU or UK student, excluding Scottish students who must wait thirty-five years.

If you become unfit for employment the loan may be written off, if you can provide the evidence required.

If you go bankrupt, your student loans aren’t wiped; they’re harder to shake than Sherlock Holmes. They come out through the other side and when you’re solvent again you’ll have to start paying again.

Death will kill off your student loans.

Is it possible to pay more quickly?

You can pay back as much as you like (as long as it is above the minimum) per month without being penalised. If you wanted to pay back the full amount in one go, feel free to.

What happens if I leave my course early?

Obviously you need to let your University or College know that you’re leaving (and be polite about it, explain your reasons, it’s common courtesy and the University may be more flexible with how much you have to pay) but you must remember to let Student Finance know that you’re leaving too.

Depending on how far through the year you make it, you’ll have to pay back a percentage:

Term Repayment
1 25%
2 50%
3 100%

The system is fairly simple – the more education you receive, the more you have to pay back.

As for the maintenance loan, you’ll be expected to pay those back too. If you’ve taken any grants you will no longer be entitled to them any further so you’ll have to pay those back too. It may be that you’re asked to pay the money back upfront or you may be able to set up a monthly plan; the further you are into your degree, the more likely the chance of a monthly repayment plan. You should get in touch with the student loans company to discuss your options further.

Do student loans affect my credit score?

There is no universal credit rating or credit score so this is an impossible question to answer --every lender reads a different thing from a borrower’s past. However, student loans are very unlikely to be considered by any lender when they decide whether a customer is right for them or not.

Useful Contacts

Though it can take a while to get through, the good folks at the Student Loans Company are fairly helpful. You can give them a call on 0845 300 50 90 or, for questions on repayment, call 0845 0738 891.

The address for paper applications is:

Student Finance England

PO Box 210

Darlington

DL1 9HJ

If you have enquiries about grants, please check here.

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