Student loans explained

If you’re planning to go to university, you may want a loan to cover your tuition fees and help pay your living costs. Here, we explain how student loans work in England and Wales.

Your student loan will come from the government via the Student Loans Company (SLC). The SLC is a not-for-profit organisation that deals with loan applications, payments and repayments.

A tuition loan is used to pay your education costs. You’ll never see this money, as it gets sent straight to the university. Tuition fees are currently capped at £9,250 per year.

Your maintenance loan will be sent to your bank account. This money should help you cover the costs of living, including rent, groceries, transport and coursebooks.

In the 2018/19 academic year, you can get a maintenance loan of up to:

A grant is money you don’t have to pay back. Grants used to be available to students from low income families, but these were replaced by larger loans in 2016. The amount you can borrow depends on how much your parents or guardians earn – generally, the lower their income, the bigger your loan.

Grants are still available to students in certain circumstances, like those with dependents or a disability.

To apply for a student loan, you’ll need to

The application will ask you for things like your name, address, university course, passport details, emergency contacts and the income of your parents or carers. It can take a while to fill everything in, so give yourself plenty of time before the deadline.

For most courses starting in September, the deadline to apply for student loan is late May. You can still apply up to nine months after the start of the academic year, but that might delay your payment.

If you’ve been accepted for a student loan, you don't need to worry about paying your university for tuition, as the SLC will pay it directly.

Paying for university accommodation is a different matter. You university should explain how to pay them directly for your residence. This is usually done every term, and you may be able to set up a direct debit. The maintenance loan is there to help you with this cost – just remember to save enough of it, and to pay on time.

The earliest you’ll start repaying your student loan is the April after you graduate. You’ll only need to make payments once you earn more than £25,000 a year.

If you haven’t paid back your student loan after 30 years, the SLC will write any remaining debt clear.

You pay 9% of any earnings over £25,000 per year. This means the more you earn, the larger your payments will be.

For example, if you earn £30,000 in a year, you’ll pay 9% of £5,000 (£450). If you earn £40,000 in a year, you’ll pay 9% of £15,000 (£1,350).

The SLC will keep track of your income using your National Insurance number. When you start a job, they’ll tell HMRC, who’ll notify your employer. Your employer will then take student loan repayments out of your wages – so it’s a lot like paying taxes.

If the SLC thinks they have incorrect or incomplete data about your income, they may ask you to update them. You’ll also need to tell them if you’re abroad for more than three months. It’s a good idea to keep them updated, or they may overcharge you interest.

Interest will start being added to your loan from the moment you get it. While you’re studying, the interest rate will be the Retail Price Index (RPI) plus 3%. After you graduate, the rate will be the same or less, depending on your income. Just be aware that the RPI can change.

Interest charges on your student loan don’t affect how much you repay each month. They just affect how much you owe overall.

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