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Student loans and finance – how to pay for a degree

A student loan is a loan to help fund university study and higher education

If you are studying in the UK there are a number of different loans available from both private and government backed companies. These loans can help you pay for tuition and living costs.

Student finance loansDetails 

Lower repayments while you study
Loans to cover tuition and cost of living
Available to good, fair and bad credit scores

The loans you can get depends on your course of study, your household income and personal circumstances. Read on to find out more on:

  • Loans for first time students – if you are studying for your first undergraduate qualification you can apply for a government backed loan to fund your study
  • Loans from private companies – if you are taking a second degree or a postgraduate qualification you will need cover the costs of your education yourself,  there are a number of loans from private companies available if you plan to borrow
  • Student bank account with 0% overdraft – 0% overdrafts enable a student to borrow money for free while they study
  • Credit cards for students – students could get a credit-builder credit card, but should be wary of spending too much with one
  • Grants, scholarships and other funding – there are many grants and scholarships available from the government and universities
  • Postgraduate funding – postgraduates can apply for funding to cover their tuition from government research councils and other academic funding bodies

Loans for first-time and undergraduate students

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.

The loan that covers your course fees will be paid directly to your university or college, the maintenance loan will be deposited in your bank account at the start of each term.

These loans should only charge interest at the base rate to keep them in line with inflation.

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’re 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.


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 have the money saved up to pay for this you have a few borrowing options, but note 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.

Personal loans

Personal loans are unsecured, which means they are offered against your credit score, so 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.

With a loan the monthly repayments are fixed and you will need to meet all of them to avoid default, unlike government backed student loans you still need to meet these repayments even if you are unemployed.

There are specialised loans for study available that offer repayment holidays, or reduced monthly repayments while you study. These are often called something along the lines of “career development” or “personal development” (not to be confused with generic personal loans) or simply student finance loans.


Student finance loansDetails 

Lower repayments while you study
Loans to cover tuition and cost of living
Available to good, fair and bad credit scores


But make sure you have a job lined up, or enough cash in the bank, to be able to afford the higher 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 you 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 and make sure you don’t spend over the limit you are give or fees and interest charges will apply.

Often a bank will give you an overdraft limit that will increase for each year of study (eg £1,000 in first year, £2,000 in second, £3,000 in third). 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 considered 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 don’t 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

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 are 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.

Student finance loansDetails 

Lower repayments while you study
Loans to cover tuition and cost of living
Available to good, fair and bad credit scores

Read more…

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  • Student credit cards – If you’re at university, it may be worth getting a credit card to help with your day-to-day finances – find out if a credit card is right for you