How student finance really works

Learners working on a computer

We know that the thought of taking out a student loan can be daunting for many, however a student loan is vastly different from a personal loan.

Here are the key things you need to know about student finance: 

When and how do you start paying it back? 

If your course starts on or after 1 August 2023:

  • You only start paying your student loan back when you’re earning over the £25,000 (per year) required.
  • What you pay is only 9% of the amount you earn over this sum, so if you earn £28,000 a year, you’d pay 9% on the £3,000 which is £270, or £22.50 per month. 
  • If you don’t earn over £25,000 you don’t pay it back until you do.
  • So that’s: 9% of (Actual Annual Income minus the Income Threshold of £25,000) divided by 12 months = monthly repayment.
  • This amount is deducted from your pay on a monthly basis in a similar way to tax of National Insurance.

How much you pay back will depend on when you started your course. You can check different plans from previous years on the website.

Who’s eligible for student finance? 

To be eligible you’ll need to meet the following criteria: 

  • Hold ‘Settled’ status; 
  • Have lived in England for 3 years prior to starting the course*; and 
  • You don’t already have an equal level qualification from the UK or any other country. 

If you’re from Northern Ireland, Scotland or Wales you apply to Student Finance NI, Student Finance Scotland or Student Finance Wales respectively.

*EU/ EEA nationals will need to have settled/ pre-settled status for courses starting on or after 1 August 2021.

What’s the difference between a Tuition Loan and a Maintenance Loan?

A Tuition Loan is used to cover the course fees, what you get is based on the amount that the university or Higher Education provider charge for their course, some providers charge more than others so if this is a concern check what their fees are on their website.  

Part-time study is charged at half this rate as its spread across the two years instead of one. 

A Maintenance Loan is used to cover, depending on your personal circumstances (what your parents do and earn) you may or may not be eligible to receive this. Most students take a maintenance loan out where they are planning on moving away from home to cover bills and rent.

You can apply for student finance loans to cover the cost of both your Tuition and Maintenance Loans.

Search courses starting in January.

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