Student Finance – How it works

Student Finance – How it works

How do people pay for university courses and what about their living costs?

To cover the costs of higher education in England, there are two types of student loan available: a tuition fee loan and a maintenance loan.

Tuition fee loans are there to cover the cost of the course. Currently, universities and colleges are able to charge up to a maximum of £9,250 per year for a typical full-time higher education course.
Maintenance loans are available to help with the everyday costs of living, for example: accommodation, food, utility bills and socialising etc.

Watch: Student Finance explained

How much can people borrow?

Tuition fees
Anyone who meets the eligibility criteria can apply for a tuition fee loan to cover the cost of their course. Whatever amount is being charged for the course is the amount that you would apply for.

Maintenance loan
For maintenance loans, the amount you can borrow depends on your family’s household income and whether you’ll be studying inside or outside of London. If you’ll be living away from home (and outside of London), a maintenance loan of up to £9,488 per year is available for households earning £25,000 per year or less.

*If you’re going to university in London, the maximum loan amount available is £12,382. This is to account for the higher cost of living in the capital.

If the household income is more than £25,000, the amount you will be eligible for will be lower. Due to the higher household income, it is expected that parents or carers will help. Another option that many students choose is to work part-time.

View: Quick Start Finance Guide

Who can apply for these loans?

Generally speaking, if you’re a UK national, or have ‘settled status’ in the UK, you can apply for tuition fee loans and/or maintenance loans. For specific eligibility criteria, we recommend checking out the following page:

Student Finance – Who Qualifies?

How and when does it get paid back?

When it comes to repaying these loans, both are added together (that’s if you’ve borrowed both). Repayments start in the April after you have finished your studies and when you are earning over a certain amount. The threshold currently stands at £27,295.

Repayments are not linked to how much was borrowed, they are based on how much you earn:

  • If you earn under the threshold, you don’t repay anything until you’re earning above it.
  • If you never earn above the threshold, you’ll never pay anything.
  • If you do earn over the threshold, you’ll repay 9% of whatever you earn over it.

After 30 years, whatever amount is outstanding gets written off. In fact, it’s been highlighted that around 60% of graduates won’t have paid their full loan back after 30 years.

Check out our HE Knowledge Hub podcast, Episode 1: Student Finance here

How much are monthly repayments?

The table below shows approximate monthly repayments for a range of salaries at the current threshold of £27,295.

*Click to enlarge. Note that figures are approximate and may be subject to change. 


How does interest work on student loans?

Like the repayments, interest is linked to how much you earn, but it doesn’t change the amount you repay each month. This article by Martin Lewis (from last year) explains the topic of student loan interest really well.

Financial support for eligible students

There’s a range of financial support for eligible students. Use the links below to find out more:

Why does any of this matter? Let’s find out.

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