Paying For An Education This Year? Here's A Quick Guide To Student Finance


If your child is heading off to university soon, or if you’re thinking of taking your first degree, diploma, or masters course (there’s no upper age limit for student loans), it’s important to understand how you – or they – are going to pay.



We often get asked for advice on the best approach to student finance; if you’re a parent, should you pay the costs yourself and help your child avoid taking on debt, or encourage them to take out the loan and then pay it off in full for them, or take the loan and then let it run, perhaps on the basis that the child’s income may be below the repayment threshold?


This can be a complex area, and there’s lots of information on the government website here. Alternatively, if you already know about the intricacies of student finance, you can begin an application online.


Here's a brief overview of the main rules, together with our suggestions for how to make the most of them to get the best value.

Please note that this only applies to those students beginning courses in 2021/22 or later; different rules may apply for those already at University.



Applying for Financing


By now, you will have likely have already applied for student finance and the first installment should soon be deposited. If you/your child have not yet applied for student finance, it is still possible to do so, however you will need to be efficient in completing the application and providing the required information and documents.


Once your application has been approved, the applicant will be entitled to a tuition fee loan, as well as a maintenance fee loan. Other means of support are available in some circumstances, including maintenance grants, financial hardship, or disability, but in most cases, support will be restricted to these two.


We thoroughly recommend checking what is available to you/your child before they begin their course. You can do so by using the student finance calculator here.


To apply for student financing, you can start a new application here, or you can log into Student Finance to check the status of your current application.



Types of Financing Available


There are two main components to undergraduate student financing:

  • Tuition Fee Loan – of up to £9,250 for a full-time student.

  • Maintenance Loan – designed to help pay living costs. The amount received is determined by the household income of the student.


There is one main component to post-graduate financing:

  • One-off payment - of up to £11,570 for a full-time student.



How Student Financing Works



Tuition Fee Loan


For an undergraduate degree, the loan is paid directly to the educational institution in instalments at the start of each term to cover the cost of the course. The loan is repayable as part of the overall student debt.



Maintenance Loan


For an undergraduate degree, this is paid into the student’s bank account at the start of each term and is intended to pay for living costs. The amount payable varies depending on living arrangements, as follows (all figures assume full-time courses):














The loan is repayable as part of the overall student debt.


You can log into Student Finance to check the details of your instalments.



Post-graduate Tuition fee & Maintenance Loan


For a post-graduate degree, a one-off payment is split into instalments, the first of which is deposited at the start of the course. This amount is intended for both tuition fees and maintenance costs. It's the responsibility of the student to make these payments.



Undergraduate Repayment


Repayments will begin once the individual completes the course and starts a job, where their income from all sources exceeds the threshold.


For undergraduate courses, the earnings threshold for Plan 2 loans is £27,295/year (£2,274/month or £524/week) before tax.


If income drops below this level again in future, the repayments will be suspended until this threshold is exceeded again.


Once you earn more than the threshold, repayments kick in and you pay 9% on the amount over £27,295.


Example one



You’re paid weekly and your income changes each week. This week your income was £600, which is over the Plan 2 weekly threshold of £524. Your income was £76 over the threshold (£600 minus £524). You will pay back £6 (9% of £76) this week.



Example two


Your annual income is £28,800 and you are paid a regular monthly wage. This means that each month your income is £2,400 (£28,800 divided by 12). This is over the Plan 2 monthly threshold of £2,274. Your income is £126 over the threshold (£2,400 minus £2,274). You will pay back £11 (9% of £126) each month.




The loan can be repaid in part or in full at any time without any additional charge. Any loan outstanding 30 years after repayments first became due will be written off. The earnings thresholds should rise each year in line with average earnings.


Any individual moving abroad will continue to be liable for the debt, which will be repaid with reference to an equivalent minimum income in their new country of residence.



Post-Graduate Repayment


Repayments will begin once the individual completes the course and starts a job, where their income from all sources exceeds the threshold.


For post-graduate courses, the earnings thresholds are £21,000 a year ( £1,750 a month or £403 a week) before tax.


If income drops below this level again in future, the repayments will be suspended until this threshold is exceeded again.


Once you earn more than the threshold, repayments kick in and you pay 6% on the amount over £21,000



Example one

You’re paid weekly and your income changes each week. This week your income was £600, which is over the Post-graduate Loan weekly threshold of £403.

Your income was £197 over the threshold (£600 minus £403). You will pay back £11 (6% of £197) this week.


Example two

Your annual income is £28,800 and you are paid a regular monthly wage. This means that each month your income is £2,400 (£28,800 divided by 12). This is over the Post-graduate Loan monthly threshold of £1,750.

Your income is £650 over the threshold (£2,400 minus £1,750). You will pay back £39 (6% of £650) each month.



The loan can be repaid in part or in full at any time without any additional charge. Any loan outstanding 30 years after repayments first became due will be written off. The earnings thresholds should rise each year in line with average earnings.


Any individual moving abroad will continue to be liable for the debt, which will be repaid with reference to an equivalent minimum income in their new country of residence.



Interest on Undergraduate Loans


Interest on the debt is charged from the date that the student or student’s educational institution receives the first instalment.


While you’re studying, interest is 5.6 %.