Student Finance

An explanation of student finance and how it works in England

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Student finance is a system of loans to fund higher education, which is post-18 education. The guidance in this section specifically covers student finance in England (the system is different for Scotland, Wales and Northern Ireland). This information covers Plan 5 student loans that came into effect in 2023.

What is student finance?

Student finance is a system of funding in the UK for people to study in higher education (also known as HE). UK students are eligible to receive student loans: money that is lent to them to cover tuition fees and also some of their living costs. The student finance system is a national system. The Student Loans Company is the organisation that manages student loans, and this is owned by the UK government. Student finance is different across the four UK nations. 

Tuition fee loan

Higher education institutions charge tuition fees for their courses. All UK students are able to apply for a tuition fee loan to cover that cost, so they do not have to pay this money up front. The Student Loans Company pays the tuition fee loan directly to the university or college where you’re studying.

Maintenance loan

The maintenance loan is the other type of student finance available. This supports living costs – things like rent, bills, food etc. Students must apply for this loan, too. The amount of money a student receives depends on 1) their household income and 2) where they plan to live and study.

Unfortunately, the maintenance loan generally does not cover a student’s full living costs. Therefore, many families help their young people with costs, and many students work whilst studying.

Repaying student loans

Because student finance is a loan, you do have to pay it back. However, student loans do not work the same way as bank loans or credit card debt. You pay based on what you earn after you graduate, not based on what you owe. It is more like a graduate tax than a debt. Key points to take away are:

  • You start paying back after you graduate
  • You only start paying when your income is above £25,000
  • The amount you pay back is 9% of your income that is above £25,000
  • If you are an employee, you pay the loan through the tax system
  • After 40 years, any leftover debt is cancelled

Bursaries and scholarships

Universities and colleges provide additional financial support to some students, such as bursaries and scholarships. This is money that you don’t have to pay back. You can check the options available on specific university/college websites or check out UCAS’ additional funding webpage.

Bursaries usually have eligibility criteria, such as household income, background or personal circumstances. Scholarships can be based on certain criteria (e.g. academic performance) and are often more competitive.

Other financial support

As well as bursaries and scholarships, other financial support is available. For example, universities often have hardship funds to support students who experience financial difficulties. You can contact your university for more information.

Also, the Disabled Students Allowance (DSA) is a national scheme that provides supports to students with a disability.

Resources about student finance

Some useful resources about student finance are:

  • The gov.uk website has an overview of student finance
  • UCAS has webpages that explain tuition fee loans, maintenance loans, and more
  • UCAS has a location-based Budget Calculator for applicants through their UCAS account
  • Money Saving Expert has guidance on student money, including bank accounts, budgeting and student loans
  • Blackbullion has resources on money management (requires free registration)
  • Save the Student publishes an annual student finance guide

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Andre Taissin
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RUT MIIT
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