A guide to student loans and student finance
A student loan is an investment in your future and is really important to successfully complete your studies.
With a student loan, you won’t need to start paying it back until you start your career and begin earning enough to make the repayments. Keep reading to understand everything you need to know about student finance and student loans.
What is a student loan?
A student loan is a type of loan that helps students pay for their tuition and other associated costs, like accommodation and textbook fees. The money you borrowed will need to be paid back at a later date.
On most loans, you’ll accumulate interest, meaning you’ll have to pay back a greater amount than what you originally borrowed. How much extra you’ll pay back on top of the original amount borrowed will depend on how much the interest rate is and how long it accumulated.
The UK government offers British student loans to eligible students to ensure that everyone can access higher education without major financial barriers.
How do student loans work in the UK?
Many people wonder how student loans work and whether they’re eligible. The process and facts about student loans are relatively straightforward, but it’s very important to always read the terms and conditions.
The UK government offers finance for tuition fees and full-time maintenance through Student Finance England (SFE). Maintenance covers living costs such as transport, food, and accommodation. Your loan (or loans) are typically paid straight into your bank account at the start of each semester, and it can take up to three working days for the payment to reflect.
Besides receiving student finance from the UK government, students can opt for private loans or other sources of funding, which we’ll explore further down.
How much student loan can I get?
One of the most common questions students ask is, ‘How much student loan can I get?’
In the UK, the amount varies depending on several factors, including your family’s income, where you live, and whether you are studying in London or elsewhere. A tuition fee loan can reach a maximum of £9,250, but you can estimate your loan better by using the government’s Student Finance UK calculator.
Types of student loans
There are two types of student loans available in the UK: tuition fee loans and maintenance loans.
- Tuition fee loans - These cover the cost of your course and are paid directly to your university over the course of the academic year.
- Maintenance loans - These help cover living costs such as rent, food and books. This loan is paid directly to you.
How to apply for student finance
To apply for student finance in the UK, you need to complete an online application through the official Student Finance UK website.
Applications are usually open several months before the start of your course, and it’s important to apply early to ensure your funds are ready when your course begins. You can also apply for student finance via the SFE website up to nine months after your course starts to cover the following years.
Student finance repayment
You will need to repay a student loan, but only after you finish studying and start earning above a certain income threshold, which is over £25,000 per year.
Repaying your student finance is a pretty straightforward process. You start repaying your loan once you earn above a certain amount, which is determined by the repayment plan you're on.
Repayments are calculated at 9% on everything you earn over the threshold. This amount is actually automatically deducted from your salary by your employer (at the same time as National Insurance).
When do you start paying back a student loan?
For many students, one of the most important questions related to student finance is ‘When do you start paying back student loans?’
In the UK, you only start repaying your student loan once your income reaches a certain threshold. The relevant repayment will either fall into a Plan 1 or Plan 2 student loan.
- If you have a Plan 1 student loan, you’ll repay it when your income is over £25,000 per year.
- If you have a Plan 2 student loan, you’ll start repaying it if your income is above £27,295 per year.
Advantages of student loans
It may seem scary to take out a big loan, but there are some advantages to getting a student loan.
- Access to higher education without having to pay fees upfront.
- Student loans often have much lower interest rates than other financing options.
- Provides credit access to students with no or limited credit history.
Can international students apply for a student loan in the UK?
Typically, international students are not eligible for education loans or student loans from the UK government. However, there are some exceptions.
- EU students - If you're from the EU and started your course before the 1st of August 2021, you might be able to get a loan for tuition fees. After that date, EU students aren’t eligible due to Brexit.
- Settled or pre-settled status - If you have settled or pre-settled status in the UK, you may qualify for a student loan.
- Other eligibility - Students with refugee status or indefinite leave to remain may also be able to apply for a student loan.
Government loans are not available for most other international students, but you can consider other financing options.
- Private loans - Banks or other lenders may offer loans, though they often have higher interest rates.
- Scholarships and grants - Many UK universities offer financial help to international students to cover tuition or living costs. Read our article on scholarships for international students to see what’s available.
FAQs about student loans and student finance
Does a student loan affect my credit score?
No, a student loan does not appear on your credit file, and it won't affect your credit score when applying for other types of credit.
When does a student loan get written off?
In the UK, a student loan is written off 30 years after you become eligible to repay it, or when you reach a certain age, depending on the repayment plan.
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