How does student finance work?

Q: How can I apply for a student loan?

You should apply for your student loan as soon as you've applied to study at university. The application process varies depending on where you live in the UK. For full details and to submit an application visit the relevant website below: Students living in England Students living in Northern Ireland Students living in Scotland Students living in Wales

Don’t let the thought of student debt put you off applying to university. We believe that everyone should have the opportunity to go to university.

Even though tuition fees have increased in recent years, find out why and how university is still affordable using our guide to university fees.

No fees to pay up front

Tuition fees for UK students are now £9,250 per year, which means that most students will graduate with a ‘debt’ of £27,750 or more after three years of study.

Student loans explained

Most students living in the UK choose to apply for a student loan. That means that the government agrees to pay your fees during your time at university.

FAQs about student finance

Search the FAQs :

How does a student loan work?

A student loan is made up of two parts

A tuition fee loan, which the government pays directly to the university. This covers the costs of teaching and other services such as student support and the library.

Students can also apply for an optional maintenance loan to help support them with the everyday costs of student life. such as accommodation, travel, shopping and socialising with friends. This will be paid directly into your child’s bank account each term.

The amount of maintenance loan you receive will depend on your household income and other factors. Such as whether you will be living at home or in student accommodation. When you apply for your student loan you’ll be asked to provide some evidence of your parent or carers earnings. Such as a P60 form, bank statements or proof that you’re receiving benefits.

* Correct from 30 January 2023

Are parents are expected to provide financial support?

It's important to mention that the maintenance loan you receive is unlikely to be enough for you to live on. In particular, it may not cover the full costs of your student accommodation. When you apply for a place in a hall of residence you may be asked to pay a deposit and/or a month’s rent upfront. This will be before you've received your student loan.

It may come as a surprise that the government expects your parent or carer to contribute towards your living costs during your time at university. You might want to sit down and work out how much money they're able to contribute towards your living costs and how much you're going to need each week. If this isn't possible, you could consider getting a part-time job to top up your income while you're at university.

In addition, you may be asked to contribute towards a small number of items which are essential for your course. Such as basic equipment, textbooks and attendance on field trips. You’ll receive details from the university when you apply.

You will need to set up a student bank account for their student loan to be paid into. Many banks offer attractive incentives for students setting up new accounts. From cinema tickets to railcards offering generous discounts on travel – so shop around to find the best deal.

How can I apply for a student loan?

Can I access additional sources of funding for university?

Many universities offer additional financial support packages for students from low-income households. Or those experiencing financial hardship. This includes bursaries, which don’t have to be paid back.

Find out what support we can offer.

For details of other government support available, including Child Tax Credits, NHS bursaries, social work bursaries, and help with costs of travel to UK clinical placements, visit gov.uk/student-finance

Repaying student loans

Don’t be put off by the size of the ‘student debt’ you will graduate with. It’s probably more accurate to think of your outstanding student loan as a ‘graduate tax’ rather than a ‘debt’. A small amount that will be deducted from your salary every month for a portion of their working life.

Here's how repayments work

As soon as your child is earning more than £27,295 per year (equal to around £2,275 per month) their repayments will start from the following April.
Repayments will be automatically deducted from their salary through the Pay As You Earn (PAYE) scheme – so they won’t have to do anything.

Each month the amount they will repay will be 9% of the amount they are earning over the threshold (not 9% of their overall salary).
So if your child earns £30,000 per year (£2,705 above the £27,295 threshold) they’ll only pay back 9% of £2,705 every year. That’s £243.45, which means they would repay around £20.29 per month.

For more straightforward advice about repaying student loans you’ll find these links useful:

* Correct from 30 January 2023. Reviewed annually.

Some important things to note

You’ll notice that the size of your child’s ‘student debt’ doesn’t affect how much they repay each month. The amount is determined by how much they earn.
Your child won’t be chased for outstanding debt. If they become unemployed or their salary falls below the threshold then their repayments will automatically stop. Until they’re earning above the threshold again.
It’s true that student loans gain interest (which is currently above the rate of inflation) – but don’t be alarmed. Whatever happens, your child’s debt will be written off after 30 years, regardless of how much they still owe. In fact, economists have predicted that the majority of students will never pay back their entire student loan.
‘Student debt’ is not taken into account when your child applies for a mortgage. So applying for a student loan now won’t affect their ability to secure a mortgage and get on the property ladder later on.
Always remember that the costs of any student loan is likely to be offset by the increased employment opportunities. As well as the higher salary your child will get to enjoy throughout their working life as a result of having gained a degree. Research carried out by the Institute for Fiscal Studies in 2020 showed that graduates will earn on average 20% more than non-graduates during their working life+.

+GOV.UK website, published 29 February 2020.

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Tuesday 21 September 2021