
Student loans
The truth about uni fees, loans & grants
Ignore newspaper headlines about students leaving university with £50,000 of debt. That's mostly a meaningless figure. What counts is how much you'll repay. For some that's far more, for others it's free. This guide is written to bust common myths about student loans, grants and finance, including the 20+ key facts every potential student, parent and grandparent should know.
This guide was originally written by Martin Lewis but is now regularly updated by the MSE team.
Is this the right guide for you? This guide explains how the student loans system works for English or Welsh students who started uni between 2012 and 2022, as well as Welsh students due to start in 2023. If you're an English student starting uni from September 2023 onwards, you're on a new system – see our 'Plan 5' student loans guide for more help.

Prefer to watch rather than read? See Martin's video below
Note: This talk was recorded in 2019, and uses the thresholds and interest rates applicable at that time. However, the theory behind repaying your student loan remains the same.
Some of the figures mentioned in this video have changed since the video was made. The following figures are the rates and thresholds for 2022:
- The maximum maintenance loan is now £12,667
- Graduates repay 9% of everything they earn over £27,295
- The rate of inflation is currently 10%
- Due to high inflation, the rate of interest was capped at 6.9% in March 2023.
Before we start, I'd just like to say:
For around a quarter of a century, we've educated our youth into debt when they go to university, but never about debt.
It was for this reason, and while no fan of them, when massive changes were announced to student finance for those starting in 2012 or beyond – including the trebling of tuition fees – I agreed to head up a student finance taskforce. The idea was to work with the National Union of Students, universities and colleges to ensure we busted the myths and misunderstandings that resulted from so much political spittle-flying.
For me, what really counts is that no student is wrongly put off going to university thinking they can't afford it. Some may rightly be put off, but unless you understand the true cost, how can you decide? I hope this guide helps achieve that.
Thankfully, since then we've also won a separate campaign to get financial education on the senior school National Curriculum in England. Yet it'll be a long time before that truly pays dividends – so there's still a lot of nonsense spoken about student loans.
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Don't confuse the cost and the price tag
With headlines shouting about £50,000 student debt and that getting bigger as loans for living costs increased in 2017, it's safe to say many students and parents are scared by this huge sum – and worry about how they'll ever repay it.
But in essence that fear is misplaced. That's because the price tag of university is mostly irrelevant. What matters in practical terms is how much you have to repay – and that's a completely separate number from the total amount of tuition fees, maintenance loan and interest.
What you repay solely depends on what you earn after university. In effect, this is (financially at least) a 'no win, no fee' education. Those who earn a lot after graduating or leaving university will repay a lot. Those who don't gain too much financially from going to university will repay little or nothing.
A much more important factor to consider is the hidden expectation of parents contributing financially to their children's living costs while at university.
Many parents aren't aware that they are expected to pick up the slack, which can seriously impact their finances, especially if they've more than one child at university. For that reason, parents should start saving early to ensure they can manage the extra costs.
This guide applies to the system in England & Wales from 2012
If you started before that you're on a different system. Please see the Should I repay my student loan? guide for full info on past loan systems.
Alternatively, you can watch Martin's video on whether to pay off your Plan 1 student loan.
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You don't need the cash to pay for university
It ISN'T a case of 'pay up or you can't go'. Once your application has been processed, tuition fees are automatically paid by the Student Loans Company. And there is a loan for living costs too.
Full-time students only need to start repaying these loans at the earliest in the April AFTER they graduate (or leave), no matter how long their course is.
Of course you don't have to take the loans, you could pay the tuition fees directly. Yet as I'll explain, that's often a bad idea.
The support available also differs for some types of students...
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You repay 9% of everything earned above £27,295 – earn less and you don't repay
Once you leave university, as long as you haven't taken out a postgraduate loan to complete a master's, you only repay your undergraduate student loan when you're earning above £2,274 a month (equivalent to £27,295/year) and then it's fixed at 9% of everything you earn above that. (NB: For Scottish students, the threshold where repayments start is £25,000/year in 2022/23.)
Remember, if you take out a postgraduate loan after your undergraduate degree, you pay this back at 6%, as well as repaying your original student loan.
Earnings mean any money from employment or self-employment and, in some cases, earnings from investment and savings.
If you've started repaying the loan, but then lose your job or take a pay cut, your repayments drop accordingly. To labour the point somewhat:
If you earn £28,000 in a year, what do you repay?
The answer is £63.45, as £28,000 is £705 above the threshold and 9% of £705 is £63.45.
And if you earn £35,000, what do you repay?
The answer is £693.45. £35,000 is £7,705 above the threshold and 9% of that is £693.45.
'How on earth will my child be able to afford to repay these debts if they get a poorly paying job?'
This panicked question has been thrown at me by many parents – and it's really important to examine it in the light of the required repayments.
Someone on a low wage will be required to repay little or nothing at all. In fact, only higher earners will be shelling out large amounts.
It's important to note that not repaying much because you're just over the threshold isn't being bad. The system is, in reality, a graduate contribution, designed so that, in the main, those who gain the most financially out of university contribute the most.
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After 30 years, any and all remaining debt is wiped
You stop owing either when you've cleared the debt, or when 30 years (from the April after graduation) have passed, whichever comes first. If you never get a job earning over the threshold, it means you won't have repaid a penny.
It's one reason those who are near retirement, who don't have a degree and want one, find it very appealing as unless they've a huge pension, they know they'll never have to repay. -
Many people earning over £27,295 will never pay it all back within the 30 years
By running the numbers on some typical situations using our Student Loan Calculator, only high earners look likely to repay all that they borrowed and the accumulated interest.
Many people earning over the £27,295/year threshold (2022/23) will never pay back their student debt within the 30 years. And lower earners won't repay very much at all.
So for many people what they borrow is irrelevant – they'll just keep paying monthly until the debt is scrubbed after 30 years. This is one reason why talk of £50,000 debts is nonsense for most.
The following table should help you see roughly who's likely to pay their loans off, and what the total cost will be. As inflation and students' future income are both unpredictable, we've had to make some assumptions. So the table should be seen as an indication of scale rather than anything more exact.
Before you look at the table
Please be aware it's designed to give a VERY rough indication of who's likely to pay the loan off. We've been forced to make many assumptions about inflation, earnings growth and graduates' earning growth, small changes which have a big impact.
The calculations also don’t factor in the recent announcement that the repayment threshold is to be frozen for two years, or that when the freeze ends, the threshold will be adjusted in line with RPI rather than average earnings. We’re working on an update to the calculator to reflect this.
So please use this as a rough guide only.We've assumed tuition fees of the full £9,250, as this is what most universities charge...
How much will you repay? (2019 starters)
Borrowing £9,250 for fees & £8,944 living costs per year, so £54,582 in total. With 3% inflation & graduate earnings growing at inflation + 2% per year.
STARTING SALARY
(AUG 2022)SALARY AFTER 30 YEARS/WHEN DEBT CLEARS TOTAL AMOUNT REPAID WILL I FULLY REPAY IT? £15,000 £64,829 Nothing (i) No £20,000 £86,441 £440 No £22,500 £97,238 £7,760 No £25,000 £108,052 £20,520 No £30,000 £129,654 £50,820 No £40,000 £172,879 £111,700 No £50,000 £216,097 £172,560 No £55,000 £186,255 £148,010 Yes – 25 years £60,000 £175,518 £125,190 Yes – 22 years (i) Assumes student loan repayment threshold goes up in line with our assumption of average salary increase. How much will you repay at today's prices?
Borrowing £9,250 for fees & £8,944 living costs per year, so £54,582 in total. Assuming 3% inflation & graduate earnings growing at inflation + 2% per year.
STARTING SALARY
(AUG 2022)SALARY AFTER 30 YEARS/WHEN DEBT FULLY REPAID TOTAL REPAID AT TODAY'S PRICES WILL I FULLY REPAY IT? £15,000 £64,829 Nothing (i) No £20,000 £86,441 £190 No £22,500 £97,238 £3,710 No £25,000 £108,052 £10,710 No £30,000 £129,654 £28,830 No £40,000 £172,879 £65,330 No £50,000 £216,097 £101,820 No £55,000 £186,255 £95,790 Yes – 25 years £60,000 £175,518 £90,120 Yes – 22 years (i) Assumes student loan repayment threshold goes up in line with our assumption of average salary increase. Figures based on the following assumptions:
- Interest is accrued daily and applied monthly.
- Inflation will be 3% each year (Bank of England statistics show inflation for 2000-2010 to be 2.7% and we have rounded it up).
- Graduate salary increase will be RPI + 2% (based on Office for National Statistics figures 2000-2010). This factors in some of an individual's potential pay increases from promotions or enhanced skills as they get older or more experienced. This differs from overall average earnings increase, which is across the whole population regardless of age.
- Tuition loan and maintenance loan are £9,250 and £8,944 respectively.
- Employment will be gained from August 2022, but repayments start April 2023.
And the following facts:
- Debt grows by inflation plus 3% until April 2023.
- The repayment threshold is £25,725 in 2019/20, after which it will rise by average earnings growth (we assume this to be RPI + 1% per year).
- Interest is accrued daily and applied monthly.
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No debt collectors with student loans
All student loans since 1998 have been repaid through the payroll just like income tax. What this means is that once you're working, your employer will deduct the repayments from your salary before you get it. So the amount you receive in your bank account each month already has it removed.
This means that if you're an employee, no debt collectors will come chasing as you don't have a choice in the matter and will have paid it automatically.
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Interest has been capped at 6.9% (for now)
Until 2012 there was no 'real' cost to borrowing money via student loans, as the interest rate was set at the rate of inflation (measured by RPI).
If you don't understand interest rates? Read the Interest Rates Beginners' Guide.
Yet for everyone who started university since the major changes in 2012, that's all changed. The interest is as follows:
While studying:
Usually accrues RPI inflation plus up to 3% on the outstanding balance. This continues until the first April after graduation, when it changes to...
After studying, earning under £27,295/year (2022/23):
Usually accrues RPI inflation.
After studying, earning £27,295 - £49,130/year (2022/23):
The interest rate will gradually rise from RPI to RPI plus up to 3% as you earn more (the interest rises 0.00015% for every extra pound you earn or, put another way, if you earn £1,000 more, you accrue 0.15% extra interest).
After studying, earning over £49,130/year (2022/23):
Usually accrues at RPI inflation plus 3%.
It's worth noting all the above scenarios assume inflation is positive (prices rising). It's not yet known what would happen in a period of deflation (prices falling). It's also worth noting that if inflation is above the 'prevailing market rate' - meaning it's costing more than other typical commercial loans - the Government will step in and cap the interest rates students are charged.
The rate you pay changes each September, and uses the previous March's RPI inflation rate.
In March 2022, RPI was at 9%. But as this was unusually high, the Government decided to temporarily cap student loan interest. It's currently 6.9% from 1 March 2023.
In practice, student loans are interest-free for many
I'm no fan of the fact that students aren't just being charged for their education, they also usually pay for financing it with above-inflation interest.
Yet that's a principled stance. Being charged interest isn't the same as needing to repay it. In practical terms for lots of graduates, especially those who never become high earners, they'll never end up repaying any interest, so it's meaningless.
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Part-timers and post-grads can get loans for tuition fees too
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.
Postgraduate students
New master's students can apply for a master's loan from the Student Loans Company to pay for their courses. These only need repaying if they earn enough once the course ends. Students starting from August 2022 can apply for up to £11,836 and it's repaid at 6%, meaning if you have an undergraduate student loan AND a postgraduate master's loan, you'll be repaying 15% of your salary, once you've reached the relevant thresholds.
New students studying on a doctoral level are eligible to apply for the doctoral loan. Like the master's loan, it only needs to be repaid if they earn above the threshold. Students starting from August 2022 can apply for up to £27,892.
Full info on this in my Postgraduate Student Loans guide.
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You can borrow for living costs too, but be warned – this is all about your parents' or partner's income, depending on your age
Full-time students can also take a loan to pay for their living costs, eg, food, books, accommodation and travel. They are known as maintenance loans, and are usually paid in three termly instalments direct to the student's bank account (in Scotland, Wales and Northern Ireland there's also a grant available).
The Student Loans Company (SLC) advises students to apply as early as possible for your student finance, even if you don’t have a confirmed place on your course. For the 2022/23 academic year, these were the deadlines to ensure your funding was in place for the start of term:
Deadlines for applying for student finance 2022/23*
New full-time students Returning full-time students
England 20 May 24 June Wales 27 May 17 June Northern Ireland 8 April 24 June Scotland 30 June 30 June *These are the deadlines to ensure you get the money in your bank account by the start of your course in September. You can still apply after these dates but you aren't guaranteed to have the money by the time you start uni.
It doesn't matter if you're studying in England or elsewhere, it's where you're mainly resident that counts. See our full list of maintenance loan and grant deadlines if you're from Wales, Scotland or Northern Ireland.
Although you can still apply for funding after the respective deadlines, any late applicants run the risk of not receiving the full maintenance support in time for the start of the new term. The Student Loans Company advises getting the application in ASAP as it can take up to six weeks to process.
The loan is repaid in exactly the same way as the loan for tuition fees (ie, 9% of everything earned above £27,295 in the 2022/23 tax year).
Yet not all is quite as it seems here. This is because the maintenance loan is means-tested, and the means-tested proportion has increased over recent years from a third to over a half. For almost every student under 25, this means-test is based on household income, which in practice means parents' income. If you're 25 or over, the means-test is based on your partner's income.
Martin Lewis warns parents about their expected contribution to the student maintenance loanEmbedded YouTube VideoSome of the figures mentioned in this video have changed since the video was made. Graduates currently repay 9% of everything they earn over £27,295.
In England, the maximum loan amount first depends on whether students live at home or go away to study (with an uplift for those studying in London). Within that, for most under-25s the amount is means-tested based on annual family residual income. The higher the income, the lower the loan. The loan amount starts reducing with family income of just £25,000/year.
However, if you're eligible for benefits, or there's one or more financial dependent children in your household or you've applied for supplementary support, your parents' income's assessed in a different way.
Here's how it works in practice, for students starting their course in 2022/23:
- Living at home: The minimum you can get is £3,597 (2022/23) of the maximum £8,171 (2022/23). The difference between what you get and the maximum, in this case £4,574 (2022/23), is the expected parental contribution.
- Living away from home, outside London: The minimum you can get £4,524 (2022/23) of the maximum £9,706 (2022/23). The remaining £5,182 (2022/23) is the expected parental contribution.
- Living away from home and studying in London: The minimum you can get is £6,308 (2022/23) of the maximum £12,667 (2022/23). The remaining £6,359 (2022/23) is the expected parental contribution.
Maximum maintenance (living) loan for English students
ACADEMIC YEAR LIVING WITH PARENTS LIVING AWAY FROM HOME LIVING AWAY FROM HOME (LONDON) LIVING AWAY FROM HOME (OVERSEAS) 2022/23 £8,171 £9,706 £12,667 £11,116 2021/22 £7,987 £9,488 £12,382 £10,866 2020/21 £7,747 £9,203 £12,010 £10,539 How it works if you're from Scotland, Northern Ireland or Wales
- Scotland & Northern Ireland: In both countries, students get a mix of a loan & grant to live off. The bigger the family income, the bigger the proportion is a loan. Yet as a higher income also reduces the total funds, a contribution is needed here too.
In Scotland, the maximum financial support is £8,100.
In Northern Ireland, the maximum financial support depends on where you live.
- If you live at home, you'll get a maximum of £5,338
- If you live away from home, but outside of London, you'll get a maximum of £6,428
- If you live away from home, but in London, you'll get a maximum of £8,368.
- Wales: This is the only UK nation with no parental contribution. Here family income dictates what proportion of the fixed funds received for living costs is a loan and what is a non-repayable grant but everyone gets the same total amount of support.
Though the maintenance loan is based on parents' earnings, and there is an implicit expectation they'll contribute financially, the Government has refused to call it that, and I've campaigned hard to make it transparent (see my letter to Government). In a win for our campaign, the Government has finally accepted this needs to be made clear to students and parents, and the Student Loans Company (SLC) has agreed to update its website accordingly. The SLC also made changes to the individual, physical letters and online portal information that students received for the 2022/23 academic year - though we think the parental contribution still needs to be made clearer.
To help you work out what parents need to contribute, I've made it simple for you, just type in your details into our parental contribution tool – now available for England, Scotland and Northern Ireland. In Wales, there's no parental contribution expected as everyone gets the same maximum amount for maintenance, made up of a combination of a grant and a loan.
Of course, knowing what the parental contribution is doesn't mean parents can afford to pay it. Yet at least it lets you understand what amount is expected, and helps students and parents have an open dialogue on it.
My biggest problem is the loan isn't big enough
While most media outlets like to focus on the headline debt figures, in real terms the main issue most students face is that the loan isn't big enough. The amount of money to live off can barely cover accommodation fees in some circumstances.
And right now, the rate of inflation is rising faster than maintenance loans are increasing. Therefore it's crucial to ensure there is a real focus on budgeting, and you don't spend the cash the first few weeks of term. Part-time jobs, any grants and extra cash from parents will all help. See Student MoneySaving tips for more on how to make the cash stretch further and try our student budgeting planner.
You could get more living support if your family's income dropped for any reason
If your parents' or partner's income has dropped due to the pandemic, or for any other reason, you may be able to get more maintenance support by applying for something called a current year income assessment.
Student finance is typically based on your household income in the tax year two years prior to the year of application. So if you're applying in 2022/23, for example, the amount you get would usually be based on your household income from the 2020/21 tax year.
But if you think your household income for the 2022/23 tax year will be significantly lower than it was in the 2020/21 tax year, you can apply for what's known as a current year income assessment (CYI), which means you might be entitled to larger maintenance loan payments throughout the academic year.
Each country has a threshold by which your household income needs to have dropped by to apply for a current year income assessment. They are:
- England: Household income drop by at least 15%. See the Gov website.
- Northern Ireland: A drop by at least 5%. See the student finance NI website.
- Scotland: A drop into a different 'income bracket' (there are four brackets - how much you'll get depends on which one you fall into). See the SAAS website.
- Wales: A drop by at least 15%. The way finance works here means you'll probably get an increased share of non-repayable grant to repayable loan. See the student finance Wales website.
If your household income is already below the minimum threshold, you won’t get a larger loan as you'll already receive the maximum.
In England, the Student Loans Company has changed the way you apply for CYI for 2022/23 applications onwards. Previously, students would be required to download, complete, and return forms to apply for CYI, and then do the same again at the end of the tax year to provide their parents' or partner's finalised income. Students will now be able to request a CYI assessment and provide the end of year actuals all from their online accounts.
Current year income (CYI) assessments will be available for students applying for student finance for the 2022/23 academic year, once the new tax year starts on 6 April 2022.
- Living at home: The minimum you can get is £3,597 (2022/23) of the maximum £8,171 (2022/23). The difference between what you get and the maximum, in this case £4,574 (2022/23), is the expected parental contribution.
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Grants were replaced by larger loans for 2016/17 starters and beyond
Maintenance grants have been scrapped for new students in England – however, they're still available for those who started on their course before 1 August 2016. You do not have to pay the grant back, but it will reduce how much maintenance loan you'll get.
Grants are still available in other parts of the UK.
Will scrapping student grants stop people going to university?
In practical terms, getting rid of the student grant only affects high-earning graduates. That's because after leaving university, students repay 9% of everything they earn over £27,295/year (2022/23) for a maximum of 30 years. Those who'd currently qualify for a full grant would only actually pay more if it was wiped, if they'd repay their entire tuition fees, remaining maintenance loan after the grant and interest within the 30 years before the debt wipes.
A number crunch shows that as a rule of thumb, for a student living away from home who is taking the full tuition fees, this is only for those on graduate starting salaries substantially above £30,000 who then get above-inflation pay rises after that too. That is at the very high end of graduate earnings.
The real risk with ending grants is the fact larger loans can be a psychological deterrent, especially to those from non-university backgrounds.
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Student loans DO NOT go on credit files
When you borrow from a bank for a credit card, loan or mortgage, to evaluate whether they'll make money from you lenders look at three pieces of information – your application form, any previous dealings they've had with you and, crucially, the information on your credit reference files (full info: How Credit Ratings Work).
Most normal financial transactions and credit relationships you have are listed on these files – yet student loans are not included (with the exception of students who started university before 1998 under the original loans system and defaulted).
So the only way loan, credit card or mortgage providers know if you've got a student loan is if they choose to ask on application forms. They can do this and it happens, but in general it's only for bigger value transactions such as mortgages.
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Student debt can impact your ability to get a mortgage, but not as much as people think
I know many parents worry that now we have £9,250 tuition fees, the subsequent 'debt' will hit their child's ability to get a mortgage after studying.
Of course, having a student loan is worse than not having one when it comes to getting a mortgage, though going to university often results in earning a higher salary, which usually cancels this out.
Many worry about the "huge debt" putting lenders off. Actually, that isn't a problem as student loans don't appear on your credit file, so the impact isn't really about whether you'll be allowed a mortgage or not.
Where it does impact is in the affordability checks which establish whether you can afford to make repayments on a mortgage. Of course, as you have lower take-home income with a student loan, that means you'll be assessed as being able to make smaller repayments. For full help, see First-Time Buyers' Mortgage guide.
The changes in 2012 had some benefits for those getting mortgages
Many parents' biggest fear was about the increase in tuition fees from £3,000 to £9,000 back in 2012. But in some ways the changes were an improvement.
While it's now a somewhat dated issue, it does merit a mention – and if you understand this explanation, then it means you've nailed understanding the new system.
If we contrast student loans for those who start now with their 2011 predecessors, while the borrowing is bigger, the repayments are smaller. That's because recent starters pay 9% over £27,295/year (2022/23), while those who started before pay 9% over £20,195.
That means the 2011 cohort lose more of their disposable income, making mortgages far less 'affordable'.
Yet the fact they repay more each month and have borrowed less mean they're likely to clear their debt much quicker, so once they've repaid it (typically after a decade or so), they then have a bigger disposable income. So all in all, for mortgage-getting at least, the change was swings and roundabouts.
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You can repay student loans early
In the early days, the Government was consulting on penalties to stop people repaying early, but the mass of feedback (including our no to penalties submission) was against, and thankfully it decided to scrap the idea.
Yet this doesn't mean you should pay them off early, just because it's allowed. While in general we encourage people to repay their debts as quickly as possible, student loans are one of the rare cases where that will be a bad decision for some people.
This is because under the new system many won't fully repay before the debt's wiped (after 30 years, use the Student Finance Calculator to see). Overpaying each month could actually be worthless – as the overpayment's not reducing the amount you'd need to pay back at all.
Even if you've enough cash to clear the loan in full, it may not be worth it as your repayments primarily depend on what you earn, not what you borrowed. It could mean you need to repay less than what you owed. To see how this concept works, read the Beware Paying Tuition Fees Upfront guide.
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Beware paying tuition fees upfront, it could leave you £10,000s worse off
Many parents save up to avoid their children getting into 'debt'. Even more horrifically, some borrow money themselves so their children won't need student loans.
That's a petrifying thought because a student loan is the 'best' form of debt you'll ever get. The interest is relatively low and crucially you only need to repay it if you earn enough.
Even if you've got the savings it can be very bad financial logic. Let's take a look...
An example:
Paul wants to study agricultural science. His parents decide they don't want him getting the tuition fee loan and shell out £28,000 of their hard-earned cash to pay his tuition fees, and give him £20,000 to live off over three years.
He graduates and wonderfully decides to go and work for a charity based in Africa for 10 years, where he never earns over £27,295. Then he comes back, gets married and becomes a full-time parent of their three children.
They paid £48,000 for money Paul will never need to repay. In fact, they'd have been far better off to save the money towards a mortgage deposit for him, as that's a far more difficult task...
Of course, I've given you an extreme example, but if you are considering paying tuition fees upfront, it can still be a waste of cash even for those who earn well over £27,295 after university. If you're considering this, read my full Beware Paying Tuition Fees Upfront guide, which takes you through the pros and cons.
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Students from, or going to, Welsh, Scottish and Northern Irish unis may have different rules
Scottish, Welsh and Northern Irish students, including those who decide to study in England, receive their financial support from their "home" devolved administration, so it's a matter for those governments to decide how they wish to support their students.
Scotland:
Scottish students studying in Scotland pay no tuition fees. English, Welsh and Northern Irish students studying there will be charged up to £9,250 per year, as will Scottish students studying in England, Wales and Northern Ireland.
More info: Student Awards Agency for Scotland.
Northern Ireland:
Northern Irish students studying in Northern Ireland can pay up to £4,360 per year. Those from England, Scotland or Wales will be charged up to £9,250 per year.
More info: Student Finance NI.
Wales:
Tuition fees at Welsh universities are £9,000 for those studying in Wales and £9,250 if studying in the rest of the UK.
More info: Student Finance Wales.
Here's a summary of the situation for 2022 starters:
Maximum tuition fees
WHERE STUDENT IS STUDYING WHERE STUDENT LIVES ENGLAND SCOTLAND WALES NORTHERN IRELAND England Up to £9,250 Up to £9,250 Up to £9,000 Up to £9,250 Scotland Up to £9,250 Free Up to £9,000 Up to £9,250 Wales Up to £9,250 Up to £9,250 Up to £9,000 Up to £9,250 Northern Ireland Up to £9,250 Up to £9,250 Up to £9,000 Up to £4,630 Source: UCAS -
The very highest earners aren't the very highest payers
Throughout this guide I've explained that the more you earn, the more you repay. Yet a quirk of the system means technically, beyond a certain point, that's not true.
In truth, for the huge majority of people this isn't relevant – so feel free to skip this technical point – but I add it in for technical correctness and because from a political perspective it is worth examining.
This quirk happens because seriously high earners pay off so quickly they have less time to accrue interest. If we take a ludicrous example to prove the point, if someone earned a billion pounds in their first month of work, they'd have cleared the debt in one month, so no interest would've accrued.
Of course they still repay far more in total than low earners, but it does mean rather perversely that very, very high earners repay less than high earners.
Try a wee experiment to see this. Go to the Student Loan Calculator and set it to the maximum tuition fees (£9,250 per year) and a maintenance loan of, say, £6,000 per year. Now use the salary slider to change the starting salary and – on standard assumptions of inflation and salary growth – you'll see at first the repayments rise. Then, after a starting salary of around £48,000, they start to fall.
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The student loan isn't a debt. If we changed its name to the more accurate 'graduate contribution', this mythbusting guide would be less needed
The name 'student loans' frightens people. They scare the risk averse, which tends to especially include those from non-traditional university backgrounds, off going to university. They make parents do silly things like borrowing on their expensive mortgage so their child won't be 'in debt'.
Even worse, it means many students have lost the fear of debt, and ended up taking out credit cards or payday loans – after all, if the Government enforces you to 'borrow', what can be wrong with it?
Yet the truth is what we call a student loan isn't really a debt like any other, in fact it acts far more like a tax than a loan. After all...
- It's repaid through the income tax system.
- You only repay it if you earn over a certain amount.
- The amount repaid increases with earnings.
- It does not go on credit files.
- Debt collectors will not chase for it.
- Bigger borrowing doesn't increase repayments.
- Many people will continue to repay for the majority of their working life.
But in reality it isn't a tax, it's more of a contributory contract. In effect though, it's somewhere between the two.
Time to change the name
So if we're looking for a name for this hybrid form of finance, let's try "contribution", as used in Australia. Below are a few key student loan facts where I've changed the word 'repay' to 'contribute', and suddenly they make more sense:
- You need only contribute if you earn enough (£27,295 in a year) once you graduate.
- Your contributions are taken via the payroll.
- The more financially successful you are, the more you will contribute in total.
- If you don't earn enough, you don't have to contribute.
- You only have to contribute for 30 years.
Suddenly this fear of debt looks ridiculous. Would a student say: "I'm not going to university, because if I'm a high earner afterwards they'll ask me for a contribution to my education." Of course not. They'd relish the financial success, and be assured that if they didn't do too well, they wouldn't contribute as much or even nothing at all.
The same is true of parents. Many say: "I'm worried my child will be £50,000 in debt when they leave university, I will do all I can to prevent it." However, I've never heard anyone say: "I'm worried my child will earn enough to be a higher-rate taxpayer after university, I'm saving up now to pay their tax for them."
Let's take this a step further, and put the 'contribution' within the model of income tax. Take a look at this table:
Equivalent 'marginal' (1) tax rates for graduates under 2012+ system
Earnings up to £12,570 No tax – this is within your 'personal allowance', the amount earnable before income tax starts, and under the national insurance threshold Earnings over £12,570, up to £27,295 32% tax and national insurance Earnings over £27,295 up to £50,270 41% due to addition of student loan repayments Earnings over £50,270, up to £150,000 51% due to addition of higher-rate tax, but drop in national insurance (2) Earnings above £150,000 56% due to higher-rate tax (2) (1) 'Marginal' means you only pay the specified tax rate on that portion of salary. For more, see the Tax Rates guide. (2) Earn above £100,000 and your personal allowance will also be affected. I've been campaigning to get the name changed, including meeting with the Universities Minister. For further arguments on this, see my Student loans aren't a debt editorial. Most recently, at a Conservative party conference the Universities Minister agreed with me that student loans should be called 'graduate contributions'. We'll update this guide with any further developments.
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Student loans should be counted as part of students' income
Many school leavers go straight to university with their parents or grandparents yelling "STICK TO A BUDGET!" Yet that simply isn't enough info. Think about this for a moment:
A working person shouldn't spend more than they EARN.
What shouldn't a full-time student spend more than?
It's this piece of the budgeting jigsaw many people miss, but it's crucial – without knowing your income, you can't budget.
I'd define a student's income as the student loan, any grant, any income from working and any money given by parents or relatives.
Total that up, and this is what you should budget not to spend more than.
It's important to note that while this does include the student loan, it doesn't include 0% overdrafts, which at best should be seen as an aid to cash flow but not income (see our Best Student Accounts guide) or any other commercial debt.
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Offered a fee waiver or bursary? Go for the bursary
Those coming from homes with lower incomes or less traditional university backgrounds are likely to be offered incentives by universities. The exact structure and money is likely to be given in one of three ways, but should be worth up to £3,000:
Fee waiver
Here you are given a reduction each year on your tuition fees, meaning the loan you need is less.
Bursary
This is some form of cash or gift in kind. It could range from a £1,000 grant or help with living arrangements, depending on your situation.
Scholarship
Similar to a bursary, it is usually a form of cash or gift in kind. Getting one depends on academic ability (usually A-level grades) rather than income.
See details about...
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Parental contributions are exempt from inheritance tax
Any money you give your child to go to uni (to help fund living costs or tuition fees) is exempt from inheritance tax. There are no limits to the amount you can give, as long as your child continues in full-time education or training.
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Warning. This is how it works now. Sadly it can be changed – even retrospectively
So now you understand it, the obvious question is: "How fixed is all this?"
The Government has already sold off the remaining £40 billion of student loan debt it had – a concern to many of the over four million uni leavers since 1998 with outstanding loans. In itself that can't change the terms and structures of the way the loans work, but it can change operating practices which may be a pain in the neck for some.
Yet it's important to understand Parliament is 'omnicompetent' – in other words, it's completely free to make and change rules made in the past. This means there is no 100% guarantee the system will remain unchanged for the 30 years until you're clear. It's worth being aware this is a risk factor.
In the past, it has always been thought that retrospective changes to the system go against natural justice and it hasn't happened – after all, each time a new student finance system has been introduced, it has only applied to new starters.
Yet that sacred trust was breached in November 2015, when the Government froze the repayment threshold for all those who started in 2012 and beyond – the threshold was meant to be increased. This effectively hiked the cost of student loans above what people had thought they would be when they started university. That shouldn't happen – no commercial firm would be allowed to do this.
The student loan repayment threshold was then increased from £21,000 to £25,000 in April 2018 as part of a wide-ranging review of student finance. It increased yet again to £25,725 in April 2019, £26,575 in April 2020 and to £27,295 in April 2021.
However, the Government has frozen the repayment threshold at £27,295 for 2022/23.This freeze would mean students earning above the threshold would pay around £113 more per year than they would have done if the threshold had risen by 4.6%, as it was supposed to.
The Government still refuses to enshrine many elements of student loan rates into statute – meaning it can change rates without a vote in the House of Commons. This is a very worrying situation, as it means it is difficult to trust the system. But unfortunately if you want to go to university you've got no choice.
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