Student loans: How do they work?

Going to university offers a fantastic opportunity. But you’ll need to work out how to cover your costs while you’re there…


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If you are starting a degree as a ‘fresher’ this September or October, tuition fees of up to £9,250 per year, plus accommodation and living costs mean that a student loan is likely to be an essential.

Here’s how they work…

When should I apply?

If you are in England and were looking to have your funding in place for the start of term, the deadline for applying for student loans was May 25.

For Welsh students the deadline was May 11, for Northern Irish students it was April 13. In Scotland, students have until June 30.

BUT don’t despair if you haven’t got your application done in time. You can still apply for your loans now (and up to nine months after your course start date), it just means you may have to wait a few weeks longer for your funding.

How much can I borrow?

The total amount you can get from student loans depends on where you are living (those in London receive more due to higher costs) and your family’s income.

There are two different kinds of student loan. The first is a maintenance loan, which is there to help cover your living costs, such as your accommodation, food, and so on. You get more if you live away from home as you’ll be paying rent.

The maximum you can get from the maintenance loan this year is £8,700 if you live away from home and are starting university this September, rising to £11,354 if you’re living away from home in London.

If you live at home while you are a student, the maximum maintenance loan you can get is £7,324 this year.

Part of the maintenance loan (35%) is means-tested, so you might not get as much as the maximum if your family has a higher income. The below table shows the maximum you can borrow in England with each income bracket (note, these figures are estimates and taken from the student finance calculator at


Household income

Maintenance loan

£25,000 or less
















£62,215 or above


Isn't there a maintenance grant as well as the maintenance loan?

Unfortunately not anymore. The maintenance grant was scrapped by the government in 2016, which raised some concern that students from lower income families would be deterred from applying for university.

However, you can borrow more now than before so the total amount of money you will get hasn’t changed all that much, but you will leave university with a larger debt to pay back – although how much you actually repay will depend on your earnings (see below).

What about tuition fees?

As well as the maintenance loan, there is the tuition fees loan, which covers the cost of your tuition fees. You must start paying this back the April after your course finishes.

You can borrow up to £9,250 a year to cover the cost of fees, and unlike the maintenance loan, the money is paid direct to your university (to prevent you spending it on refreshments in the Student Union bar!)

The tuition fee loan doesn’t count towards course materials, so books, lab equipment, stationery, and so on, will have to come out of your own pocket.

Tuition fees cost up to £9,520 a year in England, £9,000 a year in Wales and £4,160 a year in Northern Ireland. If you study in Scotland and are from Scotland or the EU, you do not have to pay for tuition. 

How do I apply?

You can apply for your student loans online here:

You should get a loan declaration in the post around six weeks after you’ve submitted your application, which will confirm how much you’ll get.

Do I have to repay my student loans?

You’ll start paying back any loans as well as any interest the April after you finish your university course, but only if you are earning more than £25,000 a year (previously £21,000).

You must repay 9% of everything you earn above the £25,000 threshold each year. So, for example, if you earn £29,000 a year, this is £4,000 above the £25,000 threshold. That means you’d have to repay 9% of £4,000 that year, which comes to £360.

If you don’t earn over £25,000 then you don’t have to pay anything back, and of course, if you never earn more than this, you’ll never have to pay the loans back.

What about interest?

Interest is added to everything you owe. While you are studying this is usually charged at the same rate as the Retail Prices Index (RPI) in March that year plus another 3%.

The RPI rate in March this year was 3.3% so interest charged on student loans in 2018/19 is expected to be 6.3%. This is likely to be confirmed at the end of August.

After you have finished studying, you will continue to be charged interest on what you owe. If you are earning less than £25,000, interest will be at the same rate as RPI inflation.

The more you earn, the more interest you will pay. The rate rises slowly from RPI to a maximum of RPI plus 3% once you earn £45,000 or more.

How do I make repayments?

You don’t need to worry about sending off payments every month as once you are working, your student loan repayments are taken directly from your salary before you get it.

Will my loans ever be wiped off?

Yes, any loan not repaid after 30 years is wiped off, so you may never pay it all off.

You can find out more about how to repay student loans at

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