Student finance 2024: How do UK student loans work?
- Published
Students hoping to start university in September are being urged to apply for their loans by Friday, to guarantee they have the money by the start of term.
It is possible to apply later, but the Student Loans Company says that could mean delays.
How do student loans work?
The details depend on where in the UK you live, but student loans are typically made up of:
a loan for tuition fees
a maintenance loan for living costs
Most people are entitled to the tuition fee element, which is equal to the annual cost of your course up to £9,250 per year, external.
The maintenance loan is intended to cover accommodation, food, books and equipment.
Maintenance loans are means-tested, so the amount you get depends on your family's household income. You might get extra money if you are disabled or have children.
If you are under 25 and have no contact with your parents, you might be able to apply as an "estranged student", external. This means your parents' financial situation is not taken into consideration.
Research by the Higher Education Policy Institute, external suggests maintenance loans in England actually cover only about half the cost of living, and less for students in London.
The Student Loans Company says graduates in England leave university with average debts of £44,940.
How can I find out how much I can borrow?
The amount of maintenance help available varies across the UK.
This year, students in England will be able to borrow up to £10,227 a year, external for a maintenance loan if living in the UK, outside London and away from their parents. This increases to £13,348 in London.
In Scotland, the maximum annual maintenance loan is £9,400, external for under-25s. For students living away from home in the UK outside of London, it is £12,150 in Wales, external and £6,776 in Northern Ireland. , external
Students from England can use the loans calculator on the Student Finance England, external website
Students from Wales can go to Student Finance Wales, external
Students from Scotland can go to Student Awards Agency Scotland, external
Students from Northern Ireland can go to Student Finance Northern Ireland, external
When and how to apply for student finance in 2024
You can apply for student finance if you want to start university this year.
You do not need a confirmed place at university to apply and, if your plans change, you can cancel or change your application before the start of your course.
The Student Loans Company urges prospective students to apply by 17 May to "guarantee their student finance will be in place for the start of the academic year".
However, you can still apply after the first day of the academic year for your course.
The application process is different depending on where you live:
The Student Loans Company, external processes all applications for students in England and Wales
Students in Scotland apply through the Students Awards Agency Scotland, external
Students from Northern Ireland apply through Student Finance Northern Ireland., external
How do I get the money?
The tuition fees part is paid directly to your university or education provider.
The maintenance loan is paid directly to your bank account in instalments.
These are at the start of each term in England, Wales and Northern Ireland, and monthly in Scotland.
How much interest will I be charged?
You are charged interest on the loan from the day you take it out, but the amount varies across the UK.
It is important to understand that the terms and conditions can change after you have borrowed the money - any interest-rate rises will apply to all student loans not just new applications.
For students starting courses this year in England, the interest rate will normally be set at the retail price index (RPI) measure of inflation, external. It is currently capped at 7.8%., external
For courses in:
Wales, the rate is capped at 7.8%, external
Scotland, it is 6.25%, external
Northern Ireland, it is 6.25%, external
The amount graduates pay back will depend on how much they earn.
When do I have to start paying back my student loan?
You do not have to start repaying your loan until you earn a certain amount of money after graduation, external.
The threshold for students starting university in England this year will be £25,000.
In Wales it will be £27,295, in Scotland £31,395 and in Northern Ireland £24,990.
You do not repay anything if you earn less than the threshold.
The earliest you will start repaying is the April after you leave your course.
Payments are made automatically through the tax system.
You generally repay 9% of the amount you earn over the threshold.
When are student loans written off?
In England, anyone starting university this year will pay back their loan for 40 years before it is written off, regardless of how much is owed - a decade longer than last year.
In Wales and Scotland it is 30 years, and in Northern Ireland it is 25 years.
You still have to repay your student loan if you leave your course early., external
Some people may opt to make extra repayments to clear some or all of their loan early - there is no penalty for doing so., external