If you’re heading to uni, then you’re probably already thinking about a student loan to financially support your studies. Whilst student loans are undoubtedly great for students that may not be able to afford to attend university otherwise, they can be a little bit confusing to understand… especially when it comes down to being eligble, how you can apply and just, well… how it all works.
For this reason we’ve pulled together a guide to help you understand the student loan process, including information around what you might need to consider when applying for your loan.
Understanding your student loan
What is a student loan?
A student loan is where uni students borrow money to assist them when living and studying at uni.
What different types of student loan are there?
There are currently two different types of student loan in the UK; tuition fees and maintenance loans. You may need both of these loans as each serve a different purpose.
Student tuition fees loan
Your tuition fees loan will cover (unsurprisingly) your university tuition fees, and will automatically cover whichever course you decide to enroll in. Student Finance will pay your tuition fees loan direct to the university, so you won’t actually see this money in your account at any point.
Student maintenance loan
Your maintenance loan will cover your cost of living whilst at uni. This could include your rent in halls or a student house, your food, travel, or just general living costs. The amount you can borrow for your maintenance loan will be dependent on your parents’ combined household income, so some students will receive a higher maintenance loan amount than others.
How do student loans work?
Your tuition fee loan will be paid directly to your university. You’ll receive your maintenance loan via a one-off payment each semester. You’ll then start paying back your loan when you finish uni and reach a certain salary threshold.
What about student grants/bursaries?
As well as loans, some students might be eligible for grants/bursaries which are specific to their course/uni and don’t need to be paid back. Some courses which are historically know for providing access to student grants/bursaries are nursing, teacher training and courses in medical/social fields.
You can find out more information on the government website, but may need to get in touch with your uni to see what schemes are running.
What about hardship funds/income support?
You may also be able to apply for extra support in particular circumstances. For example, some universities will have hardship funds, support for children coming from low income families, support for those with disabilities, parents’ learning allowances and adult dependents’ grants.
Again, you’ll need to contact your university to find out exactly what support is in place and how to access it. You can read more on the government’s website.
Who can take out a student loan?
Tuition fee loans
Most people (including full time and part time undergraduates/postgraduates) will be to apply for a student loan to pay for their tuition fees at uni. However, whether you are eligible to take out a tuition fee loan will depend upon a number of factors. These could include:
• Your course
• Your university
• Your age
• Your nationality
• Whether you’ve studied a higher education course before
Maintenance loans
However, only full time and part time students will be entitled to apply for a maintenance loan, which is intended to cover a students’ cost of living whilst at university (such as their food, travel and accommodation). EU students are able to apply for a maintenance loan, however they must have lived in the UK for three or more years.
How to apply for student loans
If you’re based in England, you can apply for your student loan online through Student Finance (read more on the government’s website).
If you’re based in Wales, Scotland or Northern Ireland, the process is a bit different and you can find out more about each country’s approach by clicking on these links.
When does your student loan come in?
The maintenance loan is usually paid in three instalments (one for each semester), and is paid direct to the student’s personal bank account. Your tuition fee loan will be paid directly to your university – so it’ll never hit your bank account.
If you're in Scotland, things are a little different and you can find out more by checking out the Student Awards Agency Scotland site here.
How much can you borrow for a student loan?
Student tuition fee loans
The amount you can borrow for your tuition fee loan will be your university’s course fee. This happens automatically and it isn’t something you can change. It will be paid directly to your university by Student Finance, so all you need to do is apply and provide them with the relevant information.
Student maintenance loans
It works slightly different for your maintenance loan. How much you can borrow will depend on a few things such as:
• Your parents’ or guardians’ household income
• Where you study
• Where you live
• How long you’ll be living there
As each student’s answer will be slightly different, it means that not all students will receive the same amount of money.
However, as mentioned above, there is always plenty of additional funding available. So if you’re worried about how you’ll afford life at university, it’s important to do your research. Details of some of the additional maintenance loans and grants that are available can be found on the government’s website.
When do I need to apply for a student loan?
The dates change year on year as to when you can apply for your student loan. You can keep up to date with the deadlines of when you need to apply by checking the government’s website.
Remember, you don’t need a confirmed place at university to apply, and you can apply for support for up to nine months after your course start date. However it’s also a good idea to be organised about your finances before heading to university. Find out how much maintenance loan you are likely to be eligible to receive, figure out how much your living costs are likely to be, and then calculate your budget accordingly. You may actually find that you don’t need to apply to borrow so much, decreasing the amount of student debt you will have when you leave uni.
Repaying your student loan
When do you start paying back your student loan?
After all the fun of uni, it can be a bit daunting having to think about repaying your student loans on top of trying to find a full time job.
As of September 2020, the student loan repayment requirements depend whether you’re on plan one or two. Each plan looks like this:
Plan one (loan taken out before 01/09/2012 in England or Wales)
• If income is over £1,615 per month (before tax and deductions) or £19,390 per year, students start repaying their loan in the April following course completion.
• The amount to pay back will be change in April each year.
• If their income drops below the above, students will stop paying until it increases again.
Plan two (loan taken out on/after 01/09/2012)
• If income is over £2,214 per month (before tax and deductions) or £26, 568 per year, students start repaying their loan in the April following course completion. If they work part-time, repayment will start four years after the course started.
How does student loan repayment work?
Once the student meets the above threshold, their loan is automatically deducted from their salary along with their tax, national insurance etc. However, students can make additional payments if they wish!
I’m worried about paying back my student loan
The important thing to remember is that repaying your student loan isn’t anything to worry about. The loan repayments are automatically arranged by your employer and paid out of your wage packet each month, which means that you never miss what you never had. The payments are based on your salary as well, so you won’t be paying more than what you can afford.
The bottom line is all students will have an element of debt, and it might feel like a lot to pay back when you leave university. However, it doesn’t have to be cause for concern – even making a loose plan as to how you will make your repayments, whether it’s creating a budget or having a think about what you might want to do for a future career, will make the world of difference to your peace of mind.