How Student Loans Work

Learn > Student Loans

Where does £50k debt come from?

So this is made up of 2 parts.

Firstly, the tuition fees for university - these are pricey!

However, you never see this cash as it gets paid directly from the Student Loans Company to the uni.

Then is the next bit which causes the most chaos.

‘The Maintenance Loan’

A maintenance loan is essentially what you will live off whilst you are studying.

This isn’t as scary as it sounds, but you should know how it is calculated:

This is based on your household income so let’s look at the 2 extremes (2022/23)

If your household income is below £25k you should receive the maximum loan amount:

Living at home: £8,171

Living away from home (not London): £9,706

Living away from home (London): £12,667

Living overseas: £11,116

If your household income is more than £61k you will receive the minimum loan amount:

Living at home: £3,597

Living away from home (not London): £4,524

Living away from home (London): £6,308

You can see that there is a vast contrast between these two ends of the spectrum, but for the majority of people you will likely sit somewhere in the middle.

Please note that this is for English Students only!

Is this fair?

According to the Government, yes. But realistically, no.

The expectation is that the cost of living at uni is the maximum maintenance loan and that’s what everyone will end up spending per academic year.

The reason that this becomes lower when your household income is higher is simply that your parents are expected to contribute the difference. Yes, that is really what the Government think happens.

Whilst you might get the odd top-up, this is unusual and seems extremely unfair but many may want to look at boosting their student loan income by taking on a part-time job whilst studying.

What do I pay back?

You will start paying back your student loan from 6 April following your graduation.

Earn less than £27,295 p.a? If you never earn more than this you will NEVER pay back any student loan debt.

Earn more? Then anything over this amount is charged at 9% as a student loan deduction.

Important - This is calculated monthly (£2,274 p.m) so if you get a big bonus one month you will pay student loan deductions at 9% on anything above £2,274. You cannot reclaim any deductions back!

E.g - Earn £30,000 a year:

£30,000 - £27,295 = £2,705 x 9% = £243.45 for the year in student loan deductions.

Anything remaining unpaid 30 years from this 6 April start is written off completely!