Understanding Student Loans in the UK

Published on October 12, 2023

Student Loans

Dividends Tax If you're considering higher education, you might need student loans to cover your expenses. In the UK, these loans are managed by Student Finance NI in partnership with Student Finance Northern Ireland and the government. This guide simplifies everything you need to know about student loans, including types of loans, interest rates, and repayment.

Types of Student Loans

In the UK, there are two main types of student loans:

  1. Tuition Fee Loan: This loan covers your tuition fees.
  2. Maintenance Loan: This loan helps with accommodation and living costs.

Tuition Fee Loan

If you're a full-time higher education student, you can get a Tuition Fee Loan. The loan amount covers your tuition fees, and the maximum amounts differ for students in different regions:

RegionMaximum Tuition Fee Loan Amount
Northern IrelandUp to £4,710
Rest of the UKUp to £9,250

The Tuition Fee Loan is paid directly to your university or college by Student Finance NI.

Maintenance Loan

The Maintenance Loan helps with your accommodation and living costs while you're studying. The amount you can borrow depends on various factors, including your household income, your place of residence while studying, and your course's year.

Here are the maximum Maintenance Loan amounts for Northern Ireland students:

ResidenceMaximum Maintenance Loan Amount
Living and studying in NI£5,250
Studying in London£9,492
Overseas£8,078
Living elsewhere£6,776

You can take out around 75% of the maximum Maintenance Loan without an income assessment. The remaining 25% is income-assessed, depending on your household income.

Repayment of Student Loans

Repaying student loans starts in the April after you leave your course. You'll repay nine percent of your earnings over £22,015 or the equivalent monthly or weekly amount. You can choose to repay more if you wish to clear your loan faster.

For detailed information on how and when to repay your loan, visit Repaying your student loan.

Interest on Student Loans

Student loans accrue interest from the date they are paid out until they are repaid in full. The interest rate typically applies from September 1st to August 31st each year.

Impact on Other Financial Help

If you receive income-related benefits or tax credits, the Maintenance Loan will be considered as part of your income when determining your entitlements. This assessment is based on the maximum loan amount you're eligible to borrow, even if you choose not to take the full amount.

Student Finance England

Starting Your Course on or After August 1, 2023

  • Plan 5: If you're studying an undergraduate course, PGCE, or have taken out an Advanced Learner Loan.
  • Postgraduate Loan Plan: If you're studying a postgraduate master's or doctoral course.
  • Plan 2: If you've taken a Higher Education Short Course Loan.

Starting Your Course Between September 1, 2012, and July 31, 2023

  • Plan 2: If you're studying an undergraduate course, PGCE, have taken an Advanced Learner Loan, or a Higher Education Short Course Loan.
  • Postgraduate Loan Plan: If you're studying a postgraduate master's or doctoral course.

Starting Your Course Before September 1, 2012

  • You're on Plan 1.

Student Finance Wales

Starting Your Course on or After September 1, 2012

  • Plan 2: If you studied an undergraduate course or a PGCE.
  • Postgraduate Loan Plan: If you studied a postgraduate master's or doctoral course.

Starting Your Course Before September 1, 2012

  • You're on Plan 1.

Student Awards Agency Scotland

  • You're on Plan 4 for both undergraduate and postgraduate courses.

Student Finance Northern Ireland

  • You're on Plan 1 for both undergraduate and postgraduate courses.

When Does Repayment Start?

You begin repaying your student loan when your income exceeds the threshold amount for your repayment plan. Your income includes earnings, bonuses, and overtime before tax and other deductions. Threshold amounts change every April.

  • Earliest Repayment:
    • April after you leave your course
    • April, 4 years after the course starts (for part-time or Postgraduate Doctoral courses lasting over 4 years)
    • April 2026 if you're on Plan 5

Repayments automatically stop if:

  • You stop working
  • Your income falls below the threshold

You'll make a repayment if your income exceeds the weekly or monthly threshold for your plan. If your annual income ends up being less than the yearly threshold, you can request a refund at the end of the tax year.

Thresholds for Different Plans

Plan TypeYearly ThresholdMonthly ThresholdWeekly Threshold
Plan 1£22,015£1,834£423
Plan 2£27,295£2,274£524
Plan 4£27,660£2,305£532
Plan 5£25,000£2,083£480
Postgraduate Loan£21,000£1,750£403

How Much Do You Repay?

Your repayment amount depends on your income, which is your earnings before tax and other deductions, including bonuses and overtime.

  • Plan 1, 2, 4, or 5: Repay 9% of your income over the threshold.
  • Postgraduate Loan Plan: Repay 6% of your income over the threshold.

Interest Rates

The interest rates you're charged depend on your plan type:

  • Plan 1: 6.25%
  • Plan 2: 7.3%
  • Plan 4: 6.25%
  • Plan 5: 7.3%
  • Postgraduate Loan Plan: 7.3%

Multiple Plan Types

If you have multiple plan types, your repayment depends on the plan with the lowest repayment threshold. If you don't have a Postgraduate Loan, you repay 9% of your income over the lowest threshold, even if you're on more than one plan type.

To calculate your Income tax, you can use the following tool Take Home Pay Calculator .

To compare differences between two salaries, you can use the following tool Compare two salaries .

To calculate your marginal rate tax , you can use the following tool Marginal tax rates.