Guide to getting a student loan
What You Need to Know
- A Student Loan is available to anyone from the UK or EU studying for a further education course in the UK.
- There are two types of student loan available, a tuition fee loan, to cover the costs of your course, and a maintenance loan to cover your living costs.
- Student loan fees are available to all UK and EU students, whilst Maintenance grants are only available for UK students studying a full time course.
- Maintenance Loans are means tested on your household income, so those with a high income may not be eligible.
- You can apply before confirming your place on a course, but the money will not be received until the course begins.
- You will not have to repay your loan until the April after you graduate, and only then if you earn more than £21,000. You are expected to contribute 9% of your income above that amount.
Why do I need a Student Loan?
Going to University is not cheap these days. Almost everyone is aware of the recent increase in tuition fees, meaning that students can find themselves paying as much as £9,000 a year just to attend a University. But alongside this, there is also the cost of living, which has also gone up in recent years.
These days if you are a student studying for a full-time undergraduate degree you can expect to have to find £27,000 in tuition fees, plus at least as much again to cover the costs of rent, food, and of course drink. Many students may look to find a part time bar job, or something similar to bring some money in, but rarely is this enough to cover the normal outgoings.
This means that borrowing money is the only realistic option available. Fortunately, there is a Student Loan system in place to allow students to pay for these upfront costs, and repay the debts when they are earning a decent salary. There are also a number of maintenance grants still currently available but the Government has recently announced that these are being phased out in the near future, so we are not focusing on those here.
How does a Student Loan work?
There are two different types of Student Loans that students are entitled to take:
- Tuition Fee Loan: As the name suggests, this is a loan to cover the costs of studying for your degree. If you are a UK or EU student you are entitled to claim a Tuition Fee loan to cover the full cost of your tuition fees. For Full Time students this is anything up to £9,000 a year at a regular university, or up to £6,000 at a private university.
If you are a part time student you are also eligible for a Tuition Fee Loan of up to £6,750 a year at a regular university of £4,500 a year at a Private University.
It is worth noting that Tuition Fee loans will never actually be paid to you directly, but rather will go straight to your University to cover your fees. This means there is no opportunity to borrow more than the cost of your tuition fees or to use the money for anything else.
- Maintenance Loan: A maintenance loan is available to cover the costs of living while you are a student. Unlike a Tuition Fee Loan, you can only claim a Maintenance Loan if you are from the UK, and are studying for a Full-Time course.
The amount you are entitled to will vary depending on where you are studying, and where you are living while you are studying. For the academic year beginning in September 2015, the following Maintenance Grants are available:
o Living at home – Up to £4,565 a year.
o Living away from home, outside London – Up to £5,740 a year.
o Living away from home, in London – Up to £8,009 a year.
o Spending a year abroad as part of a UK-based course - £Up to £6,820.
From September 2016, these amounts are going to increase, so if you are not beginning studying until then, keep an eye out for further details.
How do I qualify for a Student Loan?
To qualify for either a Tuition Fee Loan or a Maintenance Loan, you must be studying at a UK university.
Tuition Fee Loans are open to UK or EU citizens and to those studying either full or part time courses. When you are accepted for your course, you should receive details from your University about what the tuition fees will be, when they have to be paid for, and also how to apply for a Tuition Fee loan. When applying you will have to provide proof that you have been accepted onto the course, and once agreed, the money will be paid directly to the University. The amount borrowed will then appear on your student loan account.
Qualification requirements for a Maintenance Loan are a little stricter. They are only open to UK students studying for a full time course in the UK. If you are a part time student, an EU citizen, or a student over the age of 60, you will not be able to apply for one.
As well as being dependent on your residential status and where you are studying, Maintenance Loans are also means tested. As part of your application you will have to include details of your household income. That is your personal income, plus that of the people you live with. This might be your parents, any step-parents, or your partner. If you are deemed to have a large household income, you might not be entitled to the full amount of maintenance loan.
How do I apply for a Student Loan?
The first point to remember about applications is that you don’t have to have a confirmed place at a University to apply. If you have been made a conditional offer, or are looking to move back into academia after a period working, you can still make an application, although you will not actually receive the funds until you start your course.
You can also apply after you have started your course if your financial circumstances change and you find yourself needing a loan. The deadline for applications is 9 months after the start of the academic year.
The easiest way to apply for a student loan is online through the Student Finance England Website. You will first have to set up an account, and then complete the straightforward online application. You may be required to send in proof of identification. This should be done through a secure postal service or a courier.
Once you have been approved for a loan, you will be sent a loan declaration form, which you will have to sign and return in the post. This will contain all the terms and conditions of your loan so be sure to read it carefully and keep a copy of your signed version for your records.
If you cannot make an online application, call Student Finance England on 0300 100 0607 between 8am and 8pm on weekdays or between 9am and 4pm on weekends, for further assistance.
How do I repay my Student Loan?
Nobody who takes out a Student Loan will be expected to repay anything until the April after you complete you course and graduate. Even then, you will only be expected to start making repayments if you are earning over a certain amount.
Currently you have to be earning at least £21,000 a year before you are expected to start making repayments. This amount does increase annually though, so be sure to check if you are unsure whether you have to start making repayments yet.
If you are earning more than this amount, you will be expected to contribute 9% of your income towards loan repayments. If you receive your income through a PAYE scheme, you will see the amount automatically deducted from your salary each month. If you pay your tax through self-assessment, you will be expected to make these payments yourself.
If you wish to, you can make additional payments into your student loan account to repay your loan faster. You can manage your account online and make additional payments at any point. However most financial advisors will tell you that a student loan is a particularly affordable debt, and so should be prioritised below almost every other type of debt you may have.
If you took out a loan before 2012, your debt will be written off if it is not fully repaid after 25 years. After 2012, and you will have to wait for 30 years before it is written off.
What other options are available?
If you are not keen to take out a Student Loan (although for most people they are both the most convenient and affordable type of finance available) there are some other options available.
If you are attending a University in the UK which charges more than £6,000 a year in tuition fees, they will be obliged to provide financial support for students from poorer backgrounds. This might take the form of fee waivers, scholarships, or bursaries. Speak to your University to see what you might be eligible to apply for.
You could also consider applying for a Postgraduate Career Development loan, if you are applying for a postgraduate course, or for study intended to improve your employment prospects following a period in work. To find out more about these loans, read our comprehensive guide.
And most high street banks will offer a student bank account, which is likely to include a free overdraft limit. There will usually be no cost for using this service while you are a student, but beware that once you graduate, hefty fees might well kick in quickly. To see the latest current account deals that are available, check out our Current Account Comparison page.
- Our guide to Managing your Student Finances has plenty of useful tips for keeping your finances in shape while you are studying.
- The gov.uk website contains all the latest details on what student loans are available.
- If you are thinking of becoming a mature student, our guide has all the information you will need.