Student loans are designed to help students pay for university and college tuition fees, as well as their books, rent and other living expenses.
The amount of money you can borrow depends on whether you are studying full-time or part-time, and on your living circumstances.
There are two types of loans:
- A tuition fee loan for full-time and part-time students
- A maintenance loan for full-time students only
Unlike other types of loans, the repayments of student loans are deferred until the student is employed and earning above a certain amount. Additionally, the interest rate is charged at a lower rate.
Once you are earning above the threshold then you start repaying the loans, and the repayments are dependent on how much you earn, not how much you owe.
Interest is charged on the loan from the day you take it out, and be aware that the terms and conditions can change.
Tuition fee loan
The tuition fee loan covers the cost of your tuition fees and is paid directly to your college or university, who sets your tuition fee. Currently, for courses starting in 2017 in England the maximum tuition fee is capped at £9,250.
| Student Type | Max Tuition Fee Loan 2017/18 |
|---|---|
| New full-time students | £9,250 |
| New full- time students at private university or college | £6,165 |
| New part-time students | £6,935 |
| New part-time students at private university or college | £4,625 |
For part-time students, the course needs to have a ‘course intensity’ of at least 25 per cent as part of the eligibility criteria.
This is a measure of how much of your course you complete each year, compared to the full-time equivalent course. To check the course intensity you should contact your university or college.
Maintenance loan for living costs
A maintenance loan is paid directly into your bank account at the start of each term, and you need to pay it back.
The loan covers your living costs such as rent, food and activities. The amount you receive depends on a number of factors, such as your family income (before tax and national insurance) in the previous tax year, the year of study you are entering, and where you live.
You may need to provide details of your household income when applying for a maintenance loan.
In some cases – such as if you have children, are disabled or have a low household income – then you may be able to get extra money on top of the maximum maintenance loan allowance.
Previously, people aged over 60 years were not allowed to apply for a maintenance loan. However, now they can receive £1,863 if they live at home, £2,483 if they live away from home, £3,487 if they live away from home in London, and £2,940 if they live overseas.
| Student Type | Max Maintenance Fee Loan 2017/18 |
|---|---|
| You live at home | £7,097 |
| You live away from home and study o/s London | £8,430 |
| You live away from home and study in London | £11,002 |
| You spend a year of a UK course studying overseas | £9,654 |
Please note that you will receive less money in your final year than in your previous years of study.
Repaying student loans
Currently, If you started before 01 September 2012, then you start repaying when you earn more than £17,775 per annum. This repayment type is referred to as Plan 1.
If you started studying at university after 01 September 2012, you do not start repaying your loan until you are earning more than £21,000 a year, although this threshold may change. This repayment plan is referred to as Plan 2.
The amount you pay back is currently set at 9 per cent of your income above the minimum income threshold.
EXAMPLE: A graduate who started university in September 2013 earns £25,000 per annum. This is £4,000 above the £21,000 threshold. Therefore, 9 per cent of the £4,000 goes towards repaying their loan. This means they repay £360 over the year (so £30 every month).
Repayments are automatically taken out of your payroll if you are employed and earning above the threshold, but if you are self-employed then you need to declare it on the self-assessment form.
