UK student finance, loans, and university fees explained

The truth about tuition fees, interest rates, how to apply for student loans and their deadlines

Going into higher-education can be a big decision. Deciding what to study, where to go, and how much it will cost can be confusing when there is so much choice. 

Unfortunately the rumours are true; students are leaving university with more debt than ever before. But the government and universities don't want you think too much about it before deciding whether to go into higher-education or not.  To make it sound more palatable they're labelling student loans as a graduate tax or graduate contribution instead. Neither are accurate nor helpful to you.

Whether you see it as a tax or loan, what matters most is how much you'll pay back.  Some of you will pay back more than you borrowed and others will pay nothing depending on how much you earn after you leave your course.

There has to be a better explanation of the situation with UK university costs so that you're in the best position to decide on your future. We hope this is it.

Who are higher-education providers?

There are essentially two types of higher-education providers in the UK:

  • Publically-funded providers like universities and colleges
  • Private providers and those which don't issue undergraduate degrees . They may specialise in diplomas and postgraduate degrees only.

UK university course tuition fees

At the end of 2012 the higher-education sector in England (not the rest of the UK) changed the way it would charge fees to study undergraduate degrees. The headline from these changes has been that universities and colleges can charge fees of up to £9,250 per year for full-time undergraduate courses. Private education providers can charge whatever they want.

To be considered a student of each country you should have been living in that country for at least three years before your course starts.

Tuition fees for English students

English students studying at an English education provider have to pay the maximum £9,250 per year tuition fees. Tuition fees for accelerated degrees, which are completed quicker than standard degrees, can be up to £11,100 per year.

Tuition fees for Welsh students

If you're a Welsh student studying at a Welsh university then you will pay up to £7,500 per year. The fees are actually £9,000 per year but everyone gets a £1,000 grant regardless of income. You may be eligible for more support if your household income is less than £59,200 per year.  Tuition fees in Wales are the same for accelerated degrees.

Tuition fees for Irish students

Irish universities charge £4,630 a year for undergraduate degrees.

Tuition fees for Scottish students

Scottish students studying at a Scottish university pay nothing. The actual fee is £1,820 per year for an undergraduate degree but the Student Awards Agency for Scotland (SAAS) will cover the fees if you’re eligible. You'll have to renew your application each year for SAAS to pay the fees on your behalf.

 SAAS will pay a lesser £1,205 if you attend a private institution even if the fees charged are higher than that.

Tuition fees for EU and international students at UK universities

EU, EEA, Swiss, and international students pay a different tuition fee entirely (usually higher) than home students. This change was introduced for the 2022/2023 academic year which treats EU and international students under the same terms. You should enquire directly with your institution of choice for the fees they charge but they are almost always higher than domestic students.

Course fees are just part of the total cost of going to university. You are also likely to incur costs for daily things such as food, rent, bills, materials, and equipment. Luckily finance is available to help you cover the cost of some of these. 

Different types of student finance

England, Wales, Scotland, and Northern Ireland each independently decide the amount of funding available for students from that country. 

Course tuition fee loans

No matter where or what you study, you don't have to pay any tuition fees upfront if you don't want to. The organisations known as Student Finance England/Wales/Northern Ireland and in Scotland the Student Awards Agency for Scotland (SAAS) will lend first-time students the entire amount to pay the fees. There is no age restriction and you're eligible for the loan whether you studying full-time or part-time. It just has to be your first time in higher education so that means you can't get a loan if you already have a qualification at the same level or higher than the one you wish to gain. There are some exceptions for NHS-funded courses, teaching, and courses in medicine.

Maintenance loans

A maintenance loan is available to help you pay for expenses such as food, rent, and bills. The amount you're entitled to is decided by your household income (i.e. your parents' income unless you’re a mature or independent student) and the course you are studying. If your parents' earn above average salaries, you may not get the full amount of maintenance loan.  The government expect your parents to fund the difference or that you get a part-time job. The only other way is to get a grant or scholarship if available.

The maintenance loan is paid in installments to your bank account at the start of each semester (e.g. September, January, April). Don't forget that it is still a loan and has to be paid back in the same way as, and top of, the tuition fee loan.

Maintenance grants

A maintenance grant is the same as a maintenance loan except that it doesn't have to be repaid. Whether or not this is available to you depends on your household income.

Student grants, loans and support available for students from England, Scotland, Wales, and Northern Ireland

Full-time students from England (2022/2023) under 60-years-old 

IncomeLiving at home with parentsLiving away from home in LondonLiving away from home elsewhere
Up to £25,000£8,171£12,667£9,706
£35,000£6,796£11,255£8,318
£45,000£5,420£9,843£6,929
£55,000£4,045£8,430£5,540
£65,000+£3,597£7,018£4,524

Students from England over 60-years-old when your course begins

You can apply for a maintenance loan as well as a tuition fee loan if you're over 60-years-old and earning less than £43,780 per year.

IncomeLiving cost loan up to
Up to £25,000£4,106
£35,000£1,947
£45,000£0

Studying abroad

You'll usually be charged a lower tuition fee if you study abroad or go on a work placement for a year during your degree.

At the same time your living costs may increase if you go to study abroad. You can apply for a maintenance loan between £5,374 and £11,116 if you’re outside the UK for a year. You could also claim for travel expenses but how much you actually get will depend on your income and how long you spend abroad.

Work placements

How much maintenance loan you'll get during a work placement is determined by whether the placement is paid or unpaid. 

A 12-month paid placement will only let you access the reduced-rate of:

  • £2,205 if living at home
  • £2,940 outside of the capital
  • £4,128 if you live in London

You'll get the standard maintenance support amount if you're on an unpaid placement.

Full-time students from Wales (2022/2023)

IncomeLiving at home with parentsLiving away from home in LondonLiving away from home elsewhere
Up to £18,370£6,885 grant
£2,210 loan
£10,124 grant
£3,251 loan
£8,100 grant
£2,610 loan
£25,000£5,930 grant
£3,165 loan
£8,643 grant
£4,732 loan
£6,947 grant
£3,763 loan
£35,000£4,488 grant
£4,607 loan
£6,408 grant
£6,967 loan
£5,208 grant
£5,502 loan
£45,000£3,047 grant
£6,048 loan
£4,174 grant
£9,201 loan
£3,469 grant
£7,241 loan
£55,000£1,605 grant
£7,490 loan
£1,939 grant
£11,436 loan
£1,730 grant
£8,980 loan
£59,200+£1,000 grant
£8,095 loan
£1,000 grant
£12,375 loan
£1,000 grant
£9,710 loan

Full-time students from Scotland (2022/2023)

IncomeGrantLoanTotal
Up to £20,999£2,000£6,100£8,100
£21,000£1,125£6,100£7,225
£24,000£500£6,100£6,600
£34,000 and above£0£5,100£5,100

Other financial support for students from Scotland

Support is available for students who have extra costs like those with a disability, who are responsible for another adult ('adult dependents'),  or a single parent.

You may be given a grant of £8,100 if you’ve ever been in care by a local authority. This money doesn't need to be paid back but you won’t be allowed to also apply for a maintenance loan. You could get an additional £105 per week to help with accommodation costs in summer.

The NHS bursary from the Scottish Government will give you additional funding if you're studying a parademic science, nursing, or midwifery course. 

Full-time students from Northern Ireland (2022/2023)

IncomeLiving at home with parentsLiving away from home in LondonLiving away from home elsewhere
Up to £19,203£3,475 grant
£1,863 loan
£3,475 grant
£4,893 loan
£3,475 grant
£2,953 loan
£25,000£2,201 grant
£2,199 loan
£2,201 grant
£5,229 loan
£2,201 grant
£3,289 loan
£35,000£689 grant
£3,061 loan
£689 grant
£6,091 loan
£689 grant
£4,151 loan
£45,000£0 grant
£3,386 loan
£0 grant
£6,416 loan
£0 grant
£4,476 loan

Some people, like single parents, may be eligible for a special support grant rather than a maintenance grant. The amount you get is still up to £3,475 it won't affect your maintenance loan amount.

How much of the loan do you have to pay back?

How much of your student loan you pay back depends on how much you earn after leaving university but you will still have to pay back your student and maintenance loans even if you drop out without graduating with a degree .

Don't be fooled by the sales tactic claiming that the amount of student loan you leave with is meaningless because you may never end up paying it back. That's as absurd  as saying the amount of income tax the government charge you is irrelevant because your income may never be more than the tax-free threshold of £12,570 per year. That could only happen if you were to earn a below-average wage throughout your career which would render your investment in attending university and getting a degree pretty much useless.

Of course if you end up earning a high salary then you'll end up paying more back than you borrowed. In effect, you're paying not only for your own student loan but also those of others who have not paid payments because they don't earn enough or some other reason.

The repayment plan

The current plan is Plan 2 (courses starting after 1 Sept 2012)

  • an English or Welsh student who started an undergraduate course anywhere in the UK on or after 1 September 2012
  • an EU student who started an undergraduate course in England or Wales on or after 1 September 2012
  • someone who took out an Advanced Learner Loan on or after 1 August 2013
  • someone who took out a Higher Education Short Course Loan on or after 1 September 2022

You'll repay your undergraduate student loans at the rate of 9% on anything earnt above the current threshold of £388 a week, £1,682 a month or £20,195 a year (before tax and other deductions). 

You'll repay your undergraduate student loans at the rate of 9% on anything earnt above the current threshold of £524 a week, £2,274 a month or £27,295 a year (before tax and other deductions).

Both plans are broken down by week, month, and year because you may earn more during some months than you do in others even if you're on a salaried wage (think about bonuses, selling holidays etc).

If you also take out a postgraduate loan to complete a Masters degree, then this is paid back at the rate of 6%.  You'll pay this on top of repaying your original student loan at 9% making a total repayment rate of 15% on everything earnt over the thresholds above. These are not interest rates on the amount owed,  they show what percentage of your earnings will be used to pay off the loans.

Here are some examples what you might expect to repay on Plan 2:

  1. You earn £30,000 per year before tax and other deductions which is paid as a monthly salary. You'll repay £20.29 per month (£243.45 per year) because your earnings are £2,705 above the annual threshold. 
  2. You earn £600 per week before tax and other deductions. You'll pay £6 this week because your income was £76 over the weekly threshold. 

Plan 1 applies to courses starting before 1 September 2012

  • English and Welsh students who started an undergraduate course  in the UK before 1 September 2012
  • Northern Irish students who started an undergraduate or postgraduate course anywhere in the UK on or after 1 September 1998
  • EU students who started an undergraduate course in England or Wales between 1 September 1998 and 1 September 2012
  • EU students who started an undergraduate or postgraduate course in Northern Ireland on or after 1 September 1998

Interest rates on student loans

Plan 1 had an interest rate based solely on the Retail Price Index (RPI). This is a way of measuring how much more or less retail goods cost to purchase each year. Until recently it was around 1.5% meaning your shopping this year will cost you 1.5% more than last year.

After 2012, the Plan 2 system changed everything. You now pay an interest rate of RPI + 3% on your student loan while you're studying. This contines to accrue up until the first April after you leave your course after which the interest rate varies depending on how much you earn:

  • £27,295 or under: you'll pay the RPI rate
  • £27,296 to £49,130: the interest rate rises from the base RPI rate up to RPI + 3% (currently 7.8%) the more you make. For every £1,000 you earn, the interest rate increases by 0.15%.
  • Over £49,130:  you'll pay RPI + 3%

As of June 2022 the RPI is at a staggering 9.1% which meant many students would pay over 12% interest on their loans.

The UK government has announced a cap of 7.3% on student loans for 2022/23. That means you'll  pay a maximum of 7.3% no matter how much you earn. This is still way higher than most mortgages and personal loan interest rates. There is also no guarantee on how long the cap will last.

(In case you were wondering, the RPI can go into the negative but it is very rare and short-lived.)

Additional support and discounts

NHS grants and discounts for studying denistry or medicine

The NHS Bursary gives you grants if you’re studying to become a doctor or dentist and you're:

  • studying a 5 or 6-year undergraduate course (you can apply from year 5)
  • studying a 3 or 4-year graduate-entry course (you can apply from year 2)
  • a returning NHS Bursary student and started your course before 1 August 2017

Intercalating years (optional additional year of study on top of your degree to get additional qualifications and skills) could count as qualifying years of study for funding if you studied them as part of your:

  • bachelor's degree, in the first 4 years
  • master's degree

Intercalation years do not count if you studied them as part of your PhD.

What you’ll get

If you’re an eligible full-time student, you can apply for a:

  • non-means tested grant of £1,000 per academic year
  • tuition fee contribution
  • means-tested bursary based on your household income

The level of grant for full-time students are up to:

 2022 to 2023 academic year
Living at home with parentsUp to £2,207
Living away from home studying in LondonUp to £3,191
Living away from home studying outside LondonUp to £2,643

Student loans for those who already have a degree or higher education qualification

It is unlikely you'll be able to borrow any money from student finance companies if you already have a degree or another higher qualification such as a Higher National Diploma/Certificate.

You don't have to repay the student loan forever 

You'll stop repaying your student loans either once the debt is paid up or after 30 years have passed since you left your course – whichever comes first. If you never earn enough in the 30 years after graduation to pay it all of, then its cleared automatically for you.

If you're close to retirement and never held a degree before it could be lucrative idea to get one now because you'll probably never pay a penny back - unless you have large pension pot of course.

If you die before the student loan is paid up, the loan will be cleared and none of it will pass on as part of your estate inherited by your children or other beneficiaries. The same applies if you end up permanently disabled and unable to work.

What happens to your student loan if you leave the UK and work abroad?

So you're planning on doing a runner. Remember, the student loan is a legal contract between you and the government so just because you're no longer living in the UK doesn't mean you don't have pay it back just as with any debt.

The terms of the contract remain the same, that is, you have to pay back 9% of all earnings above the local equivalent of £27,295/year (2022/23). The equivalent is not a simple currency conversion of the local salary vs. one in the UK. It takes into account the cost of living in your chosen location so it can be substantially different.

But who's actually going to make you pay?  Within the UK you have no choice - as soon as you starting earning above the threshold your employer will deduct student loan repayments from your salary before you receive it (in the same way as taxes, national insurance and pension contributions are deducted).

If you leave the UK for a short while and return then expect to start being chased for repayments again. But if you leave the UK permanently and never return then you'll probably not pay anything back.

Bear in mind that the UK government have stated they are determined to get the money back from defaulters who move abroad, but given how they dealt with the COVID-19 loan scheme, it seems like an empty threat.

Loans for part-time and postgraduate students

Part-time students, often forgotten, make up 40% of all undergraduates. Fees start at around £4,500 with a maximum of £6,935 in 2022/23.

Yet since 2012, for the first time, part-time students studying at least 25% of a full-time course have been eligible for tuition-fee Student Loans Company loans on exactly the same basis as full-time students.

And if your course started on or after 1 August 2018, you are also eligible for maintenance loans or grants as well – although students over 60 don't qualify.