Money Wellness

UK student loans: everything you need to know

If you’re a full-time undergraduate student, you’ll be eligible for a student loan, provided you meet some basic criteria.

There are some differences in the way your loan will work depending on when you started university. The terms of loans for courses starting between 2012-2022 are different to those starting from September 2023 onwards.

We’ll make any differences clear throughout the guide.

The information provided applies to students from England only.

How does a student loan work?

There are two parts to the student loan:

  • a loan for the tuition fees
  • a loan to help with your living costs – this is known as the maintenance part of the loan

If you take out a student loan, your tuition fees will be paid directly to your university by the Student Loans Company.

You’ll also get a student maintenance loan. You'll receive this in three parts across the academic year – usually at the beginning of each term. The money will be paid directly into your bank account.

Loan for tuition fees

Tuition fees are capped at £9,250 a year until the 2025/26 academic year. Most higher education establishments charge the maximum allowed. The majority of students have their fees paid for them by the Student Loans Company.

But you can choose to pay the fees upfront yourself if you have the money to do so and you don’t want to take out a loan.

Student maintenance loan

This part of the loan is to help you cover your living costs.

You’ll usually receive a payment at the beginning of each of the three terms. The money will be paid directly into your bank account.

Part of the maintenance loan is means tested. For almost every student under the age of 25, the amount you’ll get will be based on your parents’ income.

If you’re 25 or older, the amount you’ll get will be based on your co-habiting partner’s income (if you have one).

Woman on phone asking question

How much will my student loan be?

The total cost of your tuition fees and maintenance loan, with interest added on top, can sound scary. It may even be enough to put you off going to university. But, before you change your life plans, it’s important to understand that what you’ll repay won’t necessarily be the full cost.

How much you end up paying back depends entirely on your earnings after university. Those who earn a lot will repay a lot. Those who don’t benefit too much financially from going to university will pay a lot less, maybe nothing.

Rather than thinking of your student loan as a loan, you may find it helpful to think of it as a graduate tax. This tax only kicks in once your earnings reach a certain level.

woman holding up money while exercising

What is the maximum loan you can get?

As we’ve seen your student loan comes in two parts. The first part covers your tuition fees and the second part contributes towards your living costs.

Your tuition fees should be covered, so you don’t need to worry about that. Usually, you can get a tuition fee loan for your entire course plus one extra year in case you drop out and come back later.

The amount you’ll get towards your living costs depends on:

  • your household income
  • where you’ll be living

You’ll get the maximum amount available if your annual household income (so usually your parents) is £25,000 or less.

In 2023/24, the maximum you’ll get is:

Living situation Maximum loan
Living at home £8,400
Living away from home (not in London) £9,978
Living away from home (in London) £13,022

Your maintenance loan is reduced by £1 for every £7.01 your household income is above £25,000, until 46.6% of the full loan remains.

This means the minimum amount you’ll get is:

Living situation Maximum loan
Living at home £3,698
Living away from home (not in London) £4,651
Living away from home (in London) £6,485

You’ll get the minimum amount if:

  • you’re living at home and your annual household income is £56,910 or more
  • You’re living away from home (not in London) and your annual household income is £60,836 or more
  • You're living away from London and your annual household income is £67,422 or more
Woman on laptop surrounded by coins

What are the interest rates on a student loan?

This depends on when you started your course. Also, as inflation is so high at the moment, the government has stepped in and capped student loan interest at 7.3%.

Usually though, the interest rate on your student loans will be as follows:

If you started from 2012 to 2022

During your course: your loan will gather interest at the rate of inflation - measured by the Retail Price Index (RPI) - plus 3%.

After your course, earning less than £27,295 a year (2023/24): From the first April after you graduate, your loan will usually gather interest at the rate of inflation.

After your course, earning £27,295 - £49,130 a year (2023/24): For every extra £1,000 you earn, you pay an extra 0.15% interest up to a maximum of 3%.

After your course, earning over £49,10 a year (2023/24): Your loan will usually gather interest at the rate of inflation plus 3%.

If you started from September 2023

Usually, the interest rate on your loan will be set at the rate of inflation (measured by the RPI). At the moment, though, there is a 7.3% cap on student loan interest as inflation is so high.

person on sofa

How do I apply for a student loan?

The quickest and easiest way to apply for a student loan is on the government website.
You have to apply for student loans for each year of your course, not just the first one.
It can take six weeks to process loan applications, so it’s a good idea to apply early. You can always change or cancel your application if your plans change.

person asking question

How do you pay a student loan back?

How you pay a student loan back varies slightly depending on when your course started.

If you started from 2012 to 2022

Once you leave university, you’ll start repaying your student loan when you’re earning above £27,295 a year. If you never earn over the threshold, you won’t pay anything.

You’ll repay 9% of everything you earn above the threshold.

You'll become liable for repayments the April after you leave university.

Any repayments due will be taken automatically via the payroll. Your employer will take the payments before you get paid. This means you can’t miss payments.

If you’re self-employed, you’ll pay it through the self-assessment scheme.

If you started from September 2023

After leaving your course, you’ll start repaying your student loan once you start earning over £25,000. If you never earn over the threshold, you won’t pay anything. The threshold is frozen at £25,000 until 2027. From this point, it’s due to increase with inflation.

You’ll repay 9% of everything you earn above the threshold.

You'll become liable for repayments the April after you leave university, unless you leave early. If you drop out, the earliest you’ll start paying your loan back is April 2026.

Any repayments due will be taken automatically via the payroll. Your employer will take the payments before you get paid. This means you can’t miss payments.

If you’re self-employed, you’ll pay it through the self-assessment scheme.

woman saving money in piggy bank

Could my student loan be written off?

If you started from 2012 to 2022

Your loan will be automatically wiped out after 30 years (from the April after graduation) or if you die, regardless of how much you’ve paid.

If you started from September 2023

Your loan will be automatically wiped out after 40 years (from the April after graduation) or if you die, regardless of how much you’ve paid.

woman looking through magnifying glass

Will a student loan affect my credit file?

No, your student loan isn’t recorded on your credit file.

graphic of credit file report

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