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Student loans: Scotland
11 need-to-knows for Scottish students taking out 'Plan 4' loans
Updated 17 September 2024
Student loans in Scotland work differently to the rest of the UK. If you normally live in Scotland and decide to go to university, there are 11 key things you need to know about how 'Plan 4' student finance works – even if you study elsewhere in the UK.
This is the first iteration of this guide. If you've feedback, let us know in the Plan 4 forum thread.
Is this the right guide for you? This guide explains how student loans work if you're Scottish, regardless of where in the UK you go to study. If you don't live in Scotland, you're in the wrong place – see Which student loan am I on?
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You don’t need to pay upfront to go to uni, and how much you repay is income-based
You don’t need to pay a penny upfront to go to university, so no one should be put off from going because they think they can't afford it.
You can get a student loan to cover tuition fees (if any are payable, see point 2) as well as your student living costs (called a maintenance loan). The latter is means-tested with parents expected to fill any shortfall (see point 6.)
You'll only start repaying these loans after you leave university and, even then, only once you're earning enough (see point 3).
So, what matters in practical terms is how much you have to repay, which can be a different number from the total amount of tuition fees, maintenance loan and interest. That said, if you're keen to minimise the size of your student loan, you may want to consider staying in Scotland to study...
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You'll need a bigger loan to study outside Scotland
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If you ordinarily live in Scotland and choose to go to university there to study an undergraduate degree, you're likely to be eligible for a tuition fee-waiver. If so, the Students Award Agency for Scotland (SAAS) will pay your tuition fees directly to your chosen uni – meaning you don't have to pay anything.
It's not a loan, so it WON'T have to be repaid. To get the fee-waiver, you just have to apply to SAAS before the start of each year of your course. Not having to pay tuition fees makes uni in Scotland a lot cheaper than elsewhere in the UK (though you may have one more year of living costs to pay for, as uni courses in Scotland are usually four years rather than the standard three years elsewhere in the UK).
If you do choose to study in England, Wales or Northern Ireland, you’ll still need to apply to SAAS for your funding and you'll still be on the Scottish Plan 4 system for repayments, but you'll need to take out a significantly bigger student loan to cover tuition fees, which are often as much as £9,250/year.
Crucially, a bigger loan WON'T increase your monthly repayments (see the point below for why). But it does mean that once you're earning enough to start making repayments, you'll have to make them for longer in order to clear the loan.
And if you study elsewhere in the UK, you may receive a smaller loan to cover your living costs than many of your non-Scottish peers – see point 6 below for more.
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You repay 9% of everything earned above £31,395/year – earn less and you don't repay
Once you leave university, you only repay your undergraduate student loan when you're earning above £2,616/month - equivalent to £31,395/year and then it's fixed at 9% of everything you earn above that.
So, how much you owe has no bearing on how much you repay, as your repayments are based SOLELY on how much you earn. So...
- If you earn £35,000/year and owe £20,000, you'll repay £324/year.
- If you earn £35,000/year and owe £50,000, you'll repay £324/year.
- And, if you earn £35,000/year and owe £100,000, you'll still only repay £324/year.
If you've started repaying the loan and then get a pay rise, you'll pay more of your student loan off each month. But in the same way, if you lose your job or take a pay cut, your repayments drop accordingly.
But it's worth mentioning that repayments are made monthly, so if your salary fluctuates each month, for example, due to bonuses and commissions, it may mean you'll have paid back more than 9% over the threshold in a year – sadly it's just how the system works.
In simple terms, though, the general principal is that the more you earn, the more of your student loan you'll repay – as the table below shows.
What you'll repay on a Plan 4 student loan
Salary What you'll repay each year £20,000 £0 £30,000 £0 £40,000 £774 £50,000 £1,674 £60,000 £2,574 £70,000 £3,474 £80,000 £4,374 £90,000 £5,274 £100,000 £6,174 Figures for repayments each year are only until either you've cleared your balance, or 30 years have passed, whichever is first.
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The interest rate on your loan is currently 4.3%
Interest starts being added to your student loan as soon as you (or your university) receive the money from the Student Loans Company.
The interest rate you'll be charged is the LOWER of the following:
Either: The Bank of England base rate plus 1%...
Or: The rate of inflation. This is fixed for a year on 1 September based on the Retail Price Index (RPI) from the previous March, though the actual rate is only confirmed each August.
The rate of inflation in March 2023 was 4.3%, which is lower than the current Bank of England base rate plus 1%. So the current rate of interest is 4.3%.
Remember, being charged interest isn't the same as needing to repay it, and the interest doesn't affect how much you repay each month.
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What's left of your loan after 30 years is wiped
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After you leave university, you'll keep making student loan repayments until you've either finished paying back the loan, or until 30 years have passed since the April after you left uni – whichever happens first.
So if you leave university and never earn above the repayment threshold (currently £31,395/year), after 30 years the entirety of your loan as well as any interest will be completely wiped.
The only exception to this is if you took out a student loan in or before 2006. In which case, anything you haven't paid back is written off when you either reach 65 or after 30 years – whichever is sooner.
All 'Plan 4' loans are also wiped if you're permanently disabled in such a way that you'll be permanently unfit to work, or if you die before paying it off, so it won't be passed onto your beneficiaries as part of your estate.
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You can take a loan to cover your student living costs, but beware the hidden parental contribution
![622109390]( "622109390")
Tuition fees aren't the only expense you have to worry about at uni, you also need to pay for your living costs while you're there – from food and accommodation to textbooks and travel.
To cover these costs, full-time Scottish students can usually get one or both of the following:
- Non-repayable bursary. This is worth up to £2,000/year and DOESN'T need to be repaid. How much you'll get depends on family income – the higher yours is, the smaller your bursary entitlement will be.
So, you'll get the maximum support if your household income is £20,999/year or less, while your entitlement will be quartered by the time your household income reaches between £24,000 - £33,999. Once your income is above that, you won't be entitled to any bursary. But you'll still be entitled to a maintenance loan...
- Maintenance loan. Scottish students can also take out what's called a maintenance loan to help cover their living costs while at uni. This gets paid into your bank account each term and you pay it back in exactly the same way as your tuition fee loan – it's all seen as part of the same student loan.
As with the bursary, your loan entitlement is means-tested, so it's based on household income – which, for almost every student under 25, effectively means parental income.
If your annual household income is under £34,000/year, you'll be entitled to a maintenance loan of £9,400/year. If your income is £34,000 or higher, your loan entitlement falls to £8,400/year.
Since September 2024 Scottish students can now also get the...- "Special support" loan. The £2,400 loan is available to new and continuing full-time Scottish students to help with general study, travel and childcare costs. This is available ON TOP of the existing non-repayable grant and repayable maintenance loan explained above. Unlike the maintenance loan and non-repayable grant, the special support loan is NOT means-tested, this means you'll get the full £2,400 regardless of your household income.
So that's how it works in principle, but there are two key things to understand about how it works in practice...
1. There's a hidden parental contribution
As explained above, there's a bursary and a loan to help with your student living costs.
Students from the lowest-income households get the largest amount of support, as they qualify for the maximum possible bursary, and the maximum possible maintenance loan.
As household income rises, your bursary and loan entitlement decreases, meaning you will get less total support than lower-income households.
So while it's not made explicit, the Government expects parents to fill this gap themselves. This is the hidden parental contribution. To demonstrate this, let's take a couple of hypothetical examples:
James is 18 and his parents' income is £19,000, so he'll be entitled to a non-repayable bursary of £2,000 and a repayable maintenance loan of £9,400. James' total support is therefore worth £11,400/year. There's no expected parental contribution.
John, meanwhile, is also 18. His parents' income is £50,000, meaning he isn't entitled to a non-repayable bursary, and his maintenance loan entitlement will be £8,400/year. As this is less than the total support that students from the lowest-income households will get, the Government expects John's parents to make up the difference. So the hidden parental contribution is £3,000/year.
The table below shows some more scenarios. Or, for more info and to see exactly how much you're expected to contribute each academic year, use our parental contribution calculator.
Support towards student living costs in 2024/25
Household income
Bursary
Loan
Total
Parental Contribution £0 to £20,999
£2,000
£9,400
£11,400
£0 £21,000 to £23,999
£1,125
£9,400
£10,525
£875 £24,000 to £33,999
£500
£9,400
£9,900
£1,500 £34,000 or more
£0
£8,400
£8,400
£3,000 2. If you go elsewhere in the UK to study, you may get less support than your peers
If you're Scottish and go to England or Wales to study, the maximum maintenance support you'll be entitled to is likely to be LESS than your peers from those countries will get.
For example, if you wanted to go to, say, Manchester to study, the maximum loan you would be entitled to is £9,000/year. Whereas an English student would get up to £10,227 (assuming they were living away from home), and a Welsh student would get up to £12,150/year. Only Northern Irish students would get less, as their max is £6,776.
So, you'll be getting less than many of your peers, even though you're living in exactly the same city. This will make budgeting more difficult, and you may need to consider getting a part-time job or asking your parents for (additional) help to cover the shortfall.
Family income dropped in the last two years?
Your maintenance loan entitlement is usually based on the tax year that's two years prior to the year you apply. But if you think your family income in for the 2024/25 tax year will be at least 15% lower than it was in the 2023/24 tax year, you may be able to get more maintenance support by applying for something called a current year income (CYI) assessment.
Quick questions
- Non-repayable bursary. This is worth up to £2,000/year and DOESN'T need to be repaid. How much you'll get depends on family income – the higher yours is, the smaller your bursary entitlement will be.
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Postgraduate loans are paid in the same way as undergraduate loans
Scottish students can apply for a postgraduate tuition fee loan to cover tuition fees up to £7,000 (2024/25) when enrolled in Masters' and postgraduate diploma programmes.
Full-time students are also eligible for a living cost loan of up to £4,500 and from the 2024-25 academic year the amount of loan you are entitled to will include a £2,400 Special Support Loan - meaning a total of £13,900 is available (part-time students will get less).
The tuition fee loan is paid directly to your university or college, spread equally across the years. If the tuition fee for your course is higher than the maximum loan amount, you will have to make up the difference.
There are two key requirements:
- Your course: This must be your first Master's course. It must be a full-time Master's programme (up to two years in length) or a taught postgraduate diploma programme of up to one year in length.
- Your nationality and residency: You must be a UK national (or have settled status), and have been living in Scotland for three years when your course starts. You must be normally living in Scotland (so not have moved there just to study) and aged under 60 on the first day of your first academic year.
Repayments for Scottish postgraduate loans follow the same system as Scotland's undergraduate loans (Plan 4). If you already have a Scottish undergraduate loan and your earnings go over the current threshold of £31,395, the two debts will be combined and paid via one payment each month.
For more info see: Student Awards Agency for Scotland
- Your course: This must be your first Master's course. It must be a full-time Master's programme (up to two years in length) or a taught postgraduate diploma programme of up to one year in length.
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Apply for student finance ASAP to make budgeting easier
For new and returning students, the deadline for the 2024/25 academic year was 30 June 2024. That's the last date at which you're guaranteed to receive your loan in time for the start of term.
That said, if you did miss either deadline, don't panic. You can still apply for a loan afterwards, but the later you apply, the later you'll receive the money, which may make budgeting difficult.
See our student budgeting guide for tips on managing your money while at uni.
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Your student loan ISN'T like other debts
![468821369]( "468821369")
Calling it a student 'loan' is misleading, because it doesn't really work like other types of loans or debt. In fact, it works more like a tax because:
- It's repaid through the income tax system. If you're employed and earning enough to make repayments, your employer will automatically deduct the repayments from your payslip before you get it. So, no debt collectors will come calling, as you'll have paid it whether you like it or not. (If you're self employed, you'll need to make your repayments through the self-assessment system.)
- It doesn't go on your credit report. You don't get credit-checked when you apply for a student loan, and the amount you borrow doesn't ever go on your credit report. For more on this, see Student loans and your credit report.
- It doesn't prevent you from getting a mortgage. As your loan doesn't appear on your credit report, mortgage lenders won't be able to see that you have a loan. So it won't prevent you from getting a mortgage. However, they can still ask if you have a loan, and the fact you're making monthly repayments can affect how big a mortgage you'll be assessed as being able to afford. For more, see Will a student loan affect your ability to get a mortgage.
- It's repaid through the income tax system. If you're employed and earning enough to make repayments, your employer will automatically deduct the repayments from your payslip before you get it. So, no debt collectors will come calling, as you'll have paid it whether you like it or not. (If you're self employed, you'll need to make your repayments through the self-assessment system.)
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You can repay early (but it may not be a good idea)
You can choose to pay off some or all of your student loan, whenever you want. Yet this doesn't mean you should. While we generally encourage people to repay their debts as quickly as possible, student loans are one of the rare cases where that'll be a bad decision for some.
That's because, under the 'Plan 4' system, you only start repaying your loan when you're earning £27,660/year (£31,395 from April 2024) and whatever you haven't paid back after 30 years is wiped. So if you're unlikely to ever clear your loan in full, overpaying each month is worthless – as the overpayment's not reducing the amount you'd need to pay back at all.
The only time it might make sense to repay early is if you're certain you will clear the loan before it gets wiped. Even then, it's only worth considering if you've done a number of checks – see our student loans repayment guide for more info.
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Ignore headlines about 2023 student loan changes
The Government recently announced sweeping changes to student loans for new students starting university from September 2023 onwards. But these changes ONLY apply to students from England. So, you won't be affected if you usually live in Scotland – even if you go to an English university.
But while the system isn’t changing for Scottish students right now, that doesn’t mean there won’t be changes in future. The Government has the power to make new rules, and amend past rules as it sees fit.
In other words, it's impossible to be certain that your student loan won't end up costing you more than you expected when you started university. But if you want to go to university, unfortunately you have no choice but to accept the terms of your loan as they currently stand.
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