UK Student Finance Guide 2025
Everything you need to know about funding your university education
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Table of Contents
1. Student Finance Overview
Student finance in the UK helps you pay for university without upfront costs. You don't pay anything until after you graduate and earn above a threshold.
How Student Finance Works
- Tuition Fee Loan: Paid directly to your university for tuition
- Maintenance Loan: Paid to you to cover living costs
- Repayment: Starts after graduation when earning above threshold
- Write-off: Any remaining debt is cancelled after 40 years (Plan 5)
Eligibility
To qualify for Student Finance England, you must:
- Be a UK national or have settled status
- Normally live in England
- Have been living in the UK for 3 years before the course
- Be studying an eligible undergraduate course
- Not already have an equivalent or higher qualification
Application Timeline
- Applications open: Late February/March for September start
- Deadline: Mid-May for September start (but you can apply later)
- First payment: Within days of term starting
- Payments: Three instalments per year (each term)
2. Tuition Fee Loans
The Tuition Fee Loan covers the cost of your course. It's paid directly to your university - you never see this money in your bank account.
Maximum Tuition Fees 2025/26
| Institution Type | Maximum Fee |
|---|---|
| Public universities (England) | £9,535 |
| Private institutions (approved) | £6,165 |
| Accelerated degrees (2 years) | £11,850/year |
| Foundation year | £9,535 |
Key Points About Tuition Fee Loans
- Available regardless of household income
- Covers the full fee at most universities
- Interest is added from day one (but you only pay when earning)
- You can take a smaller loan if you're paying some fees yourself
3. Maintenance Loans
The Maintenance Loan is for living costs - accommodation, food, books, and general expenses. This goes directly into your bank account.
Maximum Maintenance Loan 2025/26
| Living Situation | Maximum Loan | Minimum Loan |
|---|---|---|
| Living at home | £8,610 | £3,790 |
| Living away (outside London) | £10,227 | £4,767 |
| Living away (London) | £13,762 | £6,647 |
| Studying abroad | £12,382 | £5,758 |
How Much Will You Get?
Your maintenance loan amount depends on household income. The maximum is for household incomes of £25,000 or less. As income rises, the loan decreases:
| Household Income | Living Away (Outside London) |
|---|---|
| £25,000 or less | £10,227 |
| £35,000 | ~£9,000 |
| £45,000 | ~£7,700 |
| £55,000 | ~£6,300 |
| £62,500+ | £4,767 (minimum) |
Final Year Students
Final year students receive a reduced maintenance loan because the academic year is shorter (typically 30 weeks instead of 45). Expect about 30% less.
4. Grants & Bursaries
Unlike loans, grants and bursaries don't need to be repaid. They're free money to help with costs.
Disabled Students' Allowance (DSA)
Extra support if you have a disability, long-term health condition, mental health condition, or specific learning difficulty:
- Specialist equipment (e.g., computer, software)
- Non-medical helpers (note-takers, readers)
- General allowance for other disability-related costs
- Travel allowance if you have extra travel costs
Childcare Grant
If you have children in approved childcare:
- Up to 85% of childcare costs covered
- Maximum: £194.62/week for one child, £333.60/week for two or more
- Income-assessed - reduces with higher income
Parents' Learning Allowance
If you have children but childcare grant doesn't apply:
- Up to £1,931 per year
- For course-related costs
- Income-assessed
Adult Dependants' Grant
If you have an adult who depends on you financially:
- Up to £3,438 per year
- Income-assessed
University Bursaries & Scholarships
Many universities offer their own support:
- Access bursaries: For students from low-income families
- Academic scholarships: For high achievers
- Subject scholarships: For studying certain subjects
- Sports scholarships: For talented athletes
- Care leaver bursaries: For those who've been in care
5. Loan Repayment Explained
Student loan repayment is often misunderstood. It works like a graduate tax rather than a traditional loan.
When Repayment Starts
- The April after you leave your course (graduate or drop out)
- Only when earning above the threshold
- Automatically deducted through PAYE (like tax)
- Or via Self Assessment if self-employed
Repayment Thresholds & Rates
| Plan | Threshold (2025/26) | Repayment Rate |
|---|---|---|
| Plan 1 (pre-2012) | £26,065/year | 9% over threshold |
| Plan 2 (2012-2023) | £28,470/year | 9% over threshold |
| Plan 5 (from 2023) | £25,000/year | 9% over threshold |
| Postgraduate | £21,000/year | 6% over threshold |
Example: Monthly Repayment (Plan 5)
Salary: £35,000/year
- Threshold: £25,000
- Amount over threshold: £10,000
- Annual repayment: £10,000 × 9% = £900
- Monthly repayment: £75
At this rate, you'd take decades to repay a typical £50,000+ debt - most people won't repay in full.
Interest Rates
| Plan | Interest Rate |
|---|---|
| Plan 1 | Lower of RPI or Bank of England base rate + 1% |
| Plan 2 (while studying) | RPI + 3% |
| Plan 2 (after graduating) | RPI + 0-3% depending on income |
| Plan 5 | RPI only (no additional percentage) |
When Is the Debt Written Off?
- Plan 1: 25 years after first due to repay (or age 65)
- Plan 2: 30 years after first due to repay
- Plan 5: 40 years after first due to repay
6. Repayment Plans Compared
Which plan you're on depends on when and where you studied:
Plan 1 (Pre-September 2012)
- Threshold: £26,065
- Rate: 9% above threshold
- Write-off: 25 years or age 65
- Interest: Usually low (1.5% in 2024)
- Most people repay in full
Plan 2 (September 2012 - July 2023)
- Threshold: £28,470
- Rate: 9% above threshold
- Write-off: 30 years
- Interest: RPI + 0-3% (up to 7.3% in 2023!)
- Most won't repay in full - median repays ~£26k
Plan 5 (From August 2023)
- Threshold: £25,000 (lower than Plan 2)
- Rate: 9% above threshold
- Write-off: 40 years (longer than Plan 2)
- Interest: RPI only (no extra percentage)
- Start repaying sooner, pay for longer
Will You Repay in Full?
Most graduates won't repay their entire loan. Based on typical earnings:
- Plan 1: ~65% repay in full
- Plan 2: ~23% repay in full
- Plan 5: Estimates suggest ~50% will repay in full
For those who won't repay in full, the total amount borrowed matters less than your future earnings.
7. Student Loan Myths
Myth: Student loans affect your credit score
FACT: Student loans don't appear on your credit report and don't affect your credit score. However, repayments reduce your take-home pay, which lenders consider when assessing mortgage affordability.
Myth: You should pay off your student loan early
FACT: For most people, especially those on Plan 2 or 5, paying off early is a bad idea. If you're unlikely to repay in full before write-off, early payments are wasted money. Only high earners should consider it.
Myth: Interest makes the debt spiral out of control
FACT: The debt may grow due to interest, but your repayments are based solely on income, not balance. If you never earn enough, the balance is written off. The size of the debt only matters if you'll repay in full.
Myth: Dropping out means you don't have to repay
FACT: You have to repay whatever you borrowed, whether you completed your course or not. Dropping out means debt without a degree.
Myth: You can escape by moving abroad
FACT: If you move abroad, you're still legally required to repay. SLC sets repayment thresholds based on the cost of living in your new country. Non-compliance can result in penalties.
8. Money-Saving Tips for Students
Before University
- Apply early: Get student finance sorted before term starts
- Check all bursaries: University, local authority, charity
- Budget realistically: Research actual living costs in your city
- Consider accommodation: Living at home saves thousands
During University
- Get a student bank account: Often comes with 0% overdraft
- Use student discounts: NUS card, UNiDAYS, Student Beans
- Part-time work: 10-15 hours/week is manageable
- Cook at home: Meal prep saves hundreds vs takeaways
- Buy second-hand textbooks: Or use library copies
- Apply for hardship funds: If you're struggling, universities have emergency support
Student Discounts Worth Getting
| Category | Typical Discount |
|---|---|
| Spotify Premium | 50% off |
| Amazon Prime | 50% off |
| Apple products | 10-20% off |
| Railcards | 1/3 off rail fares |
| ASOS, H&M, etc. | 10-20% off |
| Gym memberships | 20-50% off |
| Microsoft 365 | Free through university |
After Graduation
- Check your loan statements: Make sure repayments are correct
- Don't overpay without thinking: Consider if you'll repay in full
- Update SLC with address changes: Avoid issues with correspondence
- Apply for refunds if overpaid: Especially in your final months of repayment
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James Mitchell, ACCA
Chartered Accountant & Former HMRC Advisor
James is a Chartered Certified Accountant (ACCA) specialising in UK personal taxation and financial planning. With over 12 years in practice and a background as a former HMRC compliance officer, he brings authoritative insight to complex tax topics.