Student loans are a crucial part of financing higher education for most UK students. Despite common misconceptions, the UK student loan system is designed to be manageable and fair, with repayments linked to earnings rather than the amount borrowed.
In 2025, with tuition fees at £9,250 per year and rising living costs, understanding how student loans work has never been more important. This comprehensive guide will walk you through everything you need to know about student loans, from initial application through to eventual repayment.
Whether you're a prospective student, current undergraduate, or graduate starting repayments, this guide will help you make informed decisions about your student finance.
Key Student Loan Facts for 2025/26
Maximum tuition fee loan per year
Maximum maintenance loan (London)
Repayment threshold (Plan 5)
Write-off period (Plan 5)
Types of Student Loans
Tuition Fee Loan
Covers the cost of your university tuition fees, paid directly to your university.
Key Details:
Maintenance Loan
Helps with living costs like accommodation, food, books, and travel. Paid directly into your bank account.
Maximum Amounts for 2025/26:
Living at home:
£8,610
Living away from home (outside London):
£10,227
Living away from home (London):
£13,022
Studying abroad:
£11,713
Note: These are maximum amounts. The actual amount you receive depends on household income.
Postgraduate Loans
Separate loan systems for Masters and Doctoral degrees.
Masters Loan
£12,471
For taught or research Masters degrees
Doctoral Loan
£28,673
For PhD and doctoral programmes
Eligibility Criteria
Basic Requirements
- ✓ UK national or have 'settled status'
- ✓ Normally live in England
- ✓ Been living in UK for 3 years before course starts
- ✓ Starting your first undergraduate course
- ✓ Studying at an approved UK institution
Special Circumstances
- • EU students: Different rules apply post-Brexit
- • Previous study: May affect eligibility
- • Age: No upper age limit for loans
- • Part-time: Must study at least 25% intensity
- • Distance learning: Some courses eligible
How to Apply for Student Loans
Create Your Account
Go to Student Finance England website and register. You'll need your National Insurance number and passport/birth certificate.
Timeline: Available from mid-February
Complete Application
Fill in personal details, course information, and select loan amounts. You don't need a confirmed university place yet.
Timeline: Apply by May for guaranteed funding
Submit Evidence
Provide household income evidence if applying for means-tested support. Parents/partners may need to provide information.
Timeline: Within 6 weeks of applying
Receive Decision
Get your entitlement letter showing how much you can borrow. Update with final course details when confirmed.
Timeline: 6-8 weeks after complete application
Sign Declaration
Sign your declaration form online or return by post. Payments won't be released until this is complete.
Timeline: Before course starts
Interest Rates Explained
While Studying
RPI + 3%
Interest starts from the day you receive your first payment
Example (2025): RPI 3.1% + 3% = 6.1% total
After Graduation
Variable rate based on earnings:
Note: Interest is added to your balance but doesn't affect monthly repayments, which are based solely on income.
Understanding Repayment Plans
| Plan Type | Who It's For | Threshold | Rate | Write-off |
|---|---|---|---|---|
| Plan 1 | Started before Sept 2012 | £22,015 | 9% | 25 years |
| Plan 2 | Started 2012-2022 | £27,295 | 9% | 30 years |
| Plan 4 | Scottish students | £27,660 | 9% | 30 years |
| Plan 5 | Started Sept 2023+ | £25,000 | 9% | 40 years |
| Postgraduate | Masters/PhD loans | £21,000 | 6% | 30 years |
Repayment Examples (Plan 5)
You only repay 9% of income over £25,000. Here's what that means in practice:
Annual Salary: £28,000
Income over threshold: £3,000
Annual repayment: £270
Monthly repayment: £22.50
Annual Salary: £35,000
Income over threshold: £10,000
Annual repayment: £900
Monthly repayment: £75
Annual Salary: £45,000
Income over threshold: £20,000
Annual repayment: £1,800
Monthly repayment: £150
Annual Salary: £60,000
Income over threshold: £35,000
Annual repayment: £3,150
Monthly repayment: £262.50
Remember: If you have both undergraduate and postgraduate loans, you'll repay both simultaneously once over the respective thresholds.
Common Student Loan Myths Debunked
Myth: "Student loans affect your credit score"
Reality: Student loans don't appear on credit reports and don't affect your credit score. However, they may be considered when applying for mortgages as they affect disposable income.
Myth: "You must pay back everything you borrow"
Reality: Many graduates never repay their full loan. Any outstanding balance is written off after 40 years (Plan 5), regardless of how much you still owe.
Myth: "It's better to pay upfront to avoid interest"
Reality: For most students, taking the loan is financially sensible. You only repay if earning above the threshold, and the money could be invested elsewhere.
Myth: "High earners should pay off early"
Reality: Even high earners should carefully consider early repayment. The loan conditions are favorable, and the money might generate better returns if invested.
Myth: "Parents' income doesn't matter after you apply"
Reality: You must update Student Finance if household income changes significantly, as it could affect your maintenance loan entitlement.
Managing Your Student Loan
During Your Studies
- • Keep Student Finance updated with any changes
- • Reapply each academic year
- • Report changes in household income
- • Keep copies of all correspondence
- • Update bank details if they change
After Graduation
- • Update contact details with SLC
- • Inform them if moving abroad
- • Check annual statements
- • Understand your repayment plan
- • Keep P60s to verify repayments
Special Circumstances
Studying Abroad
If your course includes a year abroad, you may be eligible for additional funding:
- • Higher maintenance loan rate for study abroad
- • Travel grants for up to 3 return journeys
- • Possible Erasmus+ or Turing Scheme funding
Part-Time Study
Part-time students can access:
- • Tuition fee loans (course intensity 25%+)
- • Maintenance loan (course intensity 25%+)
- • Pro-rata amounts based on study intensity
Withdrawing or Suspending
If you leave your course:
- • Notify Student Finance immediately
- • You may need to repay overpayments
- • Future funding may be affected
- • Repayments start if you earn above threshold
Living Abroad After Graduation
You must still repay from overseas:
- • Inform SLC before leaving the UK
- • Different income thresholds apply by country
- • Fixed monthly repayments based on local earnings
- • Penalties for non-compliance
Frequently Asked Questions
When do I start repaying?
Repayments begin the April after you graduate or leave your course, but only if you're earning above the threshold.
Can I change the amount I borrow?
Yes, you can request to decrease your loan amount during the academic year, but increases may be restricted.
What if I can't find a job after graduation?
You won't make any repayments unless earning above £25,000 (Plan 5). There's no penalty for unemployment or low earnings.
Does marriage affect my loan?
Your loan remains individual - your partner's income doesn't affect your repayments. However, household income affects new applications.
Can I defer repayments?
Repayments automatically stop if your income drops below the threshold. No application needed - it's based on your earnings.
Making Informed Decisions
Student loans can seem daunting, but understanding how they work helps you make informed decisions about your education financing. Remember that UK student loans are designed to be manageable - you only repay when you can afford to, and any remaining debt is eventually written off.
The key points to remember are:
- • Repayments are based on what you earn, not what you owe
- • You won't repay anything unless earning above the threshold
- • The loan is written off after 40 years (Plan 5)
- • It doesn't affect your credit score
- • For most students, taking the loan is the sensible choice
While the total debt might seem large, think of it more as a graduate tax than a traditional loan. Focus on choosing the right course and university for your career goals rather than worrying excessively about the debt.
Need More Help?
For personalized advice about your student finance options, speak to your school's careers advisor or contact Student Finance England directly.