Student loan changes

By Brett Dickinson

So you’re thinking about going to university? Fantastic. Whether it’s local or further afield, a BA or BSc, your favourite subject from school or something completely new, university will offer you lots of opportunities to learn more, develop who you are and become more independent. But £9,250 seems like a lot of money (because, well, it is). However, for many people university is still worth doing, so this guide aims to give an up-to-date explanation on how student finance works and to hopefully show that money does not have to be a barrier to going to university.

What’s the plan?

Since the introduction of student loans in the 1990s, there have been a number of different types. As you’re starting after August 2023, the only type you need to know about is Plan 5.

There are also two lots of money you can borrow:

1. Tuition fees (this pays for your course)
2. Maintenance loan (this is to help you live).

Tuition Fees:

You apply to the Student Loan Company for your tuition fees. These are paid directly from the student loan company to the university. If you’re a UK national (and have been for three years or more) you’re likely to be eligible for this loan. Most universities charge £9,250 per year at the moment but this might change after the ‘25/’26 academic year.

What happens if I drop out/change course/ have to redo a year/leave and come back?

Life is rarely straightforward and whilst nobody plans for any of those options, there is provision within the student loan system for that. If your circumstances change, contact the Student Loans Company and they will advise you.

Maintenance Loan:

The maintenance loan is a little more complicated. This is the money you can borrow to support your living expenses (rent, food, fun things etc). The loan is normally paid in three chunks, one at the start of each term. However, the quantity of money you can borrow is dependent on a number of factors:

1. Where you’re living – the amount you can borrow for the maintenance loans varies depending on whether you’re living at home, away from home, or in London (the theory being at home is cheaper, and London is very expensive compared to the rest of the UK)
2. Family Income – if you’re under 25 your maintenance loan is dependent on the income of where you normally live, so:

• • your parents’ incomes, or parent + parent’s partner if they live there even if they’re not related, BUT NOT any siblings’ incomes.

The maximum loan (for living away from home, outside London) is £9,978. With a household income over £25,000 this number starts to decrease gradually till it reaches a household income of £62,000. When a household reached this income, the most a student can receive is the minimum loan (about half the amount).

Repayment, the good news, and the bad news:

As with any loan, neither of these loans are free money. At some point you’ll need to pay them back. Here are the key things you need to know.

1. You don’t pay until you leave university.
2. You only start repaying when you earn over £25,000. If you’re earning under that amount you don’t pay. The £25,000 has been frozen till 2027 but it might change after this.
3. What you pay depends on what you earn, not what you owe. You repay 9% of anything earned over the threshold. See the chart below for examples of salaries/repayments.

Source: https://www.moneysavingexpert.com/students/student-loans-england-plan-5/

This is all regardless of whether you owe £500, £50,000, or anything in between.

After 40 years from the April after you leave university, any outstanding debt is wiped out. This is rare in a loan, but if you’ve not earned enough over that time you won’t be forced to pay it back.

If you’re employed by a company, it’s repaid automatically from your salary. Like tax, your employer will just take it from your pay packet. If your self-employed you have to do it by self-assessment the same as tax.

A few final thoughts:

That’s the system as it stands, this doesn’t mean it won’t change over. So keep aware of any changes and how they may affect you.

There are also a number of scholarships/bursaries/grants which are always worth looking into when applying for university (they may help with tuition fees, the maintenance loan, or both). I have written a separate blog about these here.

Many students work part-time and/or holiday jobs whilst at university, providing another way of earning money to supplement the maintenance loan or reduce the amount of loan you apply for.

At the end of the day if university is something that you want to do, finance is available to enable you to do it. The system is a bit complicated but hopefully this guide helps you understand how it works so you can make an informed choice about university.

You can read more about student finance here: Student finance in England – Everything you need to know (ucas.com), Martin Lewis’ 6 need-to-knows about ‘Plan 5’ English student finance (moneysavingexpert.com)