Student loans and finance - how to pay for a degree

Find out how to apply for student loans, how much you might receive for tuition and maintenance loans, and how to pay for university study.

Am I eligible for a student loan?

If you are starting or continuing a full-time or part time undergraduate course in 2022 to 2023 you can apply to the government for help with your student tuition fees and your living costs. You can find out what loans are available to you and how and when you will have to pay back your loan from the Student Loans Company website.

How much student loan you get depends on your course of study, your household income and your personal circumstances. For many students, household income will be the money that their parents earn as a combined sum.

What if I do not qualify for a student loan?

If you do not qualify for a tuition fees loan and a maintenance loan from the government, you may still be able to arrange a private student loan or private student finance to fund your studies. There are personal loans for students from banks and other lenders to help you through your course of study.

However, bear in mind that private student loans are actually commercial personal loans and come at higher interest rates than loans from the SLC. You will also have to pay back your personal loan while you are at university, unlike a government student loan which is only repaid after you finish and only if your income is above a certain threshold. Some people on low incomes may never have to repay their government SLC student loan in full as it is written off after 30 years. You will always have to repay a private personal loan.

What are the alternatives to a student loan?

If you do not qualify for a government student loan from the SLC, and you do not want to take out a personal loan, there are other options to help you financially through your studies. You could choose to study part time, have a job while studying, or apply for grants, bursaries or scholarships. These are available from councils, charities, trade bodies and welfare organisations, and you will need to do your own research to see if you meet the qualifying criteria.

Another option is to apply for an apprenticeship or student sponsorship, where a company pays for your further education in full or part. This option could be particularly useful if you are planning on pursuing a postgraduate qualification in a specialist field which a future employer might be interested in supporting.

When do I apply for a student loan?

The Student Loans Company (SLC), which is owned by the UK government, provides student loans in the UK. The full-time, undergraduate application service for the next academic opened in March 2022. If you want to be notified when the application service goes live next year you can sign up to the Student Finance England (SFE) mailing list to receive an email.

You can start applying for student finance even if you don't have a firm offer for a college or university place. The SLC encourages students to apply early for their student finance to make sure that the money arrives in their bank account before the start of term.

There are two types of loan: Students in England can apply for Tuition Fee Loans to cover their fees and Maintenance Loans to help with their living costs. When you sign up to a SLC online account you can log in to check on your application and use your online account to make last minute changes to the course, university or college you have signed up to. 

Loans for first-time and undergraduate students

The loans you can get depend on your course of study, your household income and your personal circumstances. If you are on a part-time course you may also be able to get a tuition and maintenance loan, but it depends on how intensive your course is. You can find out whether your course qualifies by checking the government website.

You can apply for government backed loans from one of the four student finance agencies in the UK, if you are studying one of the following courses for the first time:

• First Bachelors degree, eg BA, BSc or BEd

• Foundation Degree

• Certificate of Higher Education

• Diploma of Higher Education (DipHE)

• Higher National Certificate (HNC)

• Higher National Diploma (HND)

• Postgraduate Certificate of Education (PGCE)

• Initial Teacher Training

Regardless of which of the four UK nations you intend to study in, your finance will be provided by the loan company in your home nation.

• Student Loans Company (SLC) lends to students from England

• Student Finance Northern Ireland (Student Finance NI) lends to students from Northern Ireland

• Student Awards Agency Scotland (SAAS) lends to students from Scotland

• Student Finance Wales (SFW) lends to students from Wales

These loans will cover your tuition fees in full and you can also apply for a maintenance loan to help cover your living expenses, the size of which will vary depending on your household income.

How do student loans work?

The loan that covers your course fees will be paid directly to your university or college. The maintenance loan to pay for your rent and living expenses will be deposited in your bank account at the start of each term.

These loans have interest added at either the Retail Price Index or the Bank of England base rate plus one percentage point, whichever is lower.

Once you graduate and start earning over a certain amount each year, your repayments will be deducted from your salary in a similar method to income tax. If you are self-employed you will need to calculate your repayments as part of your tax returns.

There are no early repayment charges, if you want to repay some or all of your loan early. But any over payments are not refundable.

Loans for tuition from private companies

If you're studying for a postgraduate qualification, for your second undergraduate degree or studying at a private college, you will need to fund the costs of the degree yourself.

If you don't have the money saved up to pay for this you have a few borrowing options. Whatever you decide, you should make sure you can afford the monthly costs of any loans you take out from private companies.

This is especially important if you plan to study full time and will see a drop in your income while you study.

What type of private student loan is suitable for me?

There are a number of options for private student loans in the UK and private student finance. It may be that you want to go back to college for a short term course, or you want to retrain, or you want to combine study with a full time job.

Find out what the options are for loans for tuition fees and private tuition fee loans in the UK if you don't qualify for a loan from the Student Loans Company, or you need a top-up for your existing loan.

Bear in mind that the interest rates will be higher for a personal loan and that you will need to start repaying the loan in instalments as soon as it begins. Private student loans have different terms and conditions to the one provided by the government via the SLC.

Personal loans for students

Personal loans are unsecured, which means they are more expensive than secured loans like mortgages. Your eligibility depends on your credit score. To get the best rates or larger loans you will need to have a healthy credit report. It may be difficult to get a personal loan as student with no credit history.

However, there are things you can do to improve your credit rating, such as making sure you are on the electoral register, not missing payments for credit, and using your credit card regularly but responsibility.

With a personal loan the monthly repayments are fixed and you will need to meet all of them to avoid default. The difference between a private personal loan and the government backed student loan is that you will still need to meet these repayments even if you're unemployed.

There are specialised loans for study available that offer repayment holidays, or reduced monthly repayments while you study. These are often called "career development", or "personal development" loans, or simply student finance loans.

If you're considering either a specialist study loan or a personal loan, you do need to have a plan to repay the loan either via monthly instalments, or at the end of the term.

This might mean trying to make sure you have a job lined up, or enough cash in the bank, in order to afford the monthly repayments you will face upon graduating.

Student bank accounts with 0% overdrafts

A good student bank account with a decent 0% overdraft is one of the most useful financial products anyone studying full time can get.

An overdraft is where you are able to spend more money than you have in your account, allowing you into a negative balance up to a limit. If it is a '0% overdraft' this means you can effectively borrow for free.

Most student bank accounts should offer an 0% overdraft, but you will need make sure you apply to your bank to authorise it. Also, you need to make sure that you do not spend over the limit you are given, otherwise fees and interest charges will apply.

Often a bank will give you an overdraft limit that will increase for each year of study (£1,000 in your first year, £2,000 in the second, £3,000 in your third year). You will also typically be given a few years after graduating to repay your overdraft before being charged interest.

Credit cards for students

Credit cards can help cover living costs but should be used carefully by full time students without a regular income.

It can be difficult for a typical full-time student to get a credit card, due to what would likely be a limited credit history and income.

A credit-builder credit card could be useful to get while studying, as it can help build up a credit score ready when your graduate.

But, bear in mind most of these cards don't include any form of 0% interest period, so you will need to pay off your balance in full each month to avoid being charged interest.

If you do not think you can repay a credit card balance in full each month, it may be best to avoid getting a credit card as interest charges could soon add up and leave you out-of-pocket.

Grants, scholarships and other funding

There are a number of grants, scholarships and hardship funds available depending on your personal circumstances and financial background.

There are extra government allowances and grants to supplement your student loans if you have children, adult dependents, or if you're disabled.

In addition to the funds available from the government there are also many scholarships available at most universities which should be detailed on their websites and prospectuses.

If you are struggling to make ends meet, most universities should offer "hardship funds" to help you remain on your course if you are running out of money.

Postgraduate funding

You can get funding for postgraduate study through government loans, as well as studentships, bursaries and grants. You might also get help from your employer if you are gaining a qualification while you are working for them.

You can apply for a Postgraduate Master's Loan and Postgraduate Doctorate Loan from the government. The loan is paid directly to you and like an undergraduate loan you will need to repay the money once your income reaches a certain threshold. You may be able to get an undergraduate loan for postgraduate teacher training. There is more information available from the government website on Postgraduate Study.

In addition, you may be able to apply for studentships, grants and bursaries. There are seven government backed research councils that provide grants to fund postgraduate study and other university research work, these are:

• Arts and Humanities Research Council (AHRC)

• Biotechnology and Biological Sciences (BBSRC)

• Engineering and Physical Sciences (EPSRC)

• Economic and Social Research (ESRC)

• Medical Research (MRC)

• Natural Environment (NERC)

• Science and Technology Facilities (STFC)

If you're thinking of applying for a Masters or PhD, you should check with your relevant research council to see what funding is available.

If you receive funding likely you will be able to cover the cost of your tuition as standard and get a stipend to cover your living costs.

There are many other funding bodies providing grants for postgraduate programs. So it's worth contacting the university you intend to study at and your course supervisor, who could help you apply for funding and direct you towards available grants.

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