How Does Student Finance Work? A UK Guide

Paying for University or College

The prospect of paying for university can be daunting. Many students and parents in England worry that the cost of higher education puts it out of reach.

However, the reality is that the student finance system is designed to make it affordable. Think of it as a manageable investment in your future. Here’s the single most important fact you need to know:

Student loan repayments are based entirely on what you earn after you graduate, not the total amount you borrow.

You won’t have to pay anything back until you are earning over the official repayment threshold. In this guide, we’ll break down the facts about tuition fees and student loans, giving you the clarity you need.

Tuition Fees

Tuition fees are what your university or college charges each year to cover the cost of your course, including teaching, exams, and access to facilities like libraries.

To cover this, eligible students can apply for a Tuition Fee Loan from Student Finance England. Here are the key facts you need to know:

• It Covers the Full Cost: The loan is designed to cover 100% of your course fees.

• Paid Directly to the University: The Student Loans Company pays the money straight to your university, so you don’t have to manage the payments yourself.

• Current Fee Cap: For the 2025/26 academic year, universities in England can charge up to a maximum of £9,535 (for 2025/2026 academic year).

• Not Means-Tested: Crucially, the Tuition Fee Loan is not means-tested. This means the amount you receive doesn’t depend on your household income. Every eligible student can borrow the full fee amount, regardless of their parents' earnings.

Maintenance Loan: Covering Your Living Costs

Alongside your course fees, you will also have living costs like accommodation, food, travel, and socialising. The Maintenance Loan is provided to help you pay for these expenses.

Unlike the Tuition Fee Loan, the Maintenance Loan is means-tested. The amount you can borrow is calculated based on two key factors:

1. Your Household Income: This is typically the pre-tax income of the parents or carers you live with. The higher the household income, the lower the amount of loan offered. The system assumes a higher-earning household will contribute to the student's living costs.

2. Your Living Situation: The loan amount changes significantly depending on where you will live during your studies. There are three main rates:

   • Living at your parents' home.

   • Living away from home, outside London.

   • Living away from home, in London (this is the highest rate to reflect the capital's costs).

This loan is paid directly into the student's personal/student bank account in three instalments, once at the start of each term/semester.

Who provides student loans?

It's important to know that student finance in the UK does not come from a private bank. All loans are provided by the Student Loans Company (SLC), a secure, non-profit organisation owned by the UK government.

The SLC is responsible for managing the entire loan system. For students living in England, the application process itself is handled by a specific service called Student Finance England (SFE), which is the public-facing part of the SLC.

Because policies and figures can change, we always recommend getting information directly from the official source. The government website has the most accurate and up-to-date advice.



Student loans are provided by the Student Loans Company (SLC). SLC is a non-profit making, government-owned organisation. For students living in England, applications for a student loan are made through Student Finance England.

The most current and up to date advice can be found on the SLC website:

Visit the Official Student Loans Company 

You can read more about the changes to student loans here

Student Finance Changes 

Repaying your student loan

How Student Loan Repayments Work (Plan 5)

The student loan repayment system is designed to be manageable. Both your Tuition Fee Loan and Maintenance Loan are bundled together, so you only have one single repayment.

For all new students starting their course from 1st August 2023 onwards, repayments are made under Repayment Plan 5. Here are the key principles:

• When Repayments Start: You only begin to repay from the April after you leave your course, and only once you are earning over the repayment threshold.

• The Repayment Threshold: The current threshold for Plan 5 is £25,000 per year. If your income drops below this at any point, your repayments automatically stop.

• The Repayment Rate: You will repay 9% of your income above the threshold.

  • Example: If you earn £27,000 a year, you are £2,000 over the threshold. You would repay 9% of £2,000, which is £180 a year (or just £15 a month).

• Automatic Deductions: Repayments are taken automatically from your salary by your employer, in the same way as Income Tax and National Insurance. You don't need to do anything.

• Loan Write-Off: If you have not repaid your loan in full, any outstanding balance is written off 40 years after your repayments begin.

For the latest official figures, always check the government's student finance website.

Student Loan Interest

Understanding Student Loan Interest (Plan 5)

For students on Repayment Plan 5 (those starting from August 2023 onwards), the interest calculation is simpler than for previous plans.

The interest rate is linked only to the Retail Price Index (RPI), which is a measure of inflation. This means the rate is the same for all students on this plan, whether they are studying or have graduated, and it does not change based on your income.

How Interest Affects Your Repayments

This is the most important point to understand: the interest rate does not change your monthly repayment amount.

Your repayments are always calculated as 9% of your income above the £25,000 threshold. A higher or lower interest rate only affects the total size of your loan balance over time.

Since any outstanding loan is written off after 40 years, many graduates will not end up repaying the full amount of interest accrued.

Whilst you are still studying, the interest on your loan will be inflation plus 3%. After you have finished the course, you will pay a rate of interest based on the UK Retail Price Index (RPI) and your current level of income.

Find Out more

GOV.UK www.gov.uk/repaying-your-student-loan/what-you-pay   

Student Loans Company http://media.slc.co.uk/repayment/qsg

How do I apply for a student loan?

The application for both the Tuition Fee Loan and Maintenance Loan is completed in one single online process via the official GOV.UK website.

To ensure your funding is in place for the start of term, follow these key tips:

• Apply Early: Applications for the new academic year typically open in the spring (around March). It can take at least six weeks to process an application, so it's vital to apply as early as possible to meet the deadline.

• You Don't Need a Confirmed Place: You can and should apply before you receive any university offers. Simply use your preferred choice of course and university in your application—you can easily update these details online later if you accept a different offer.

• It’s an Annual Process: Remember, you must reapply for student finance for each year of your course. It is not a one-time application.

To start your application or find out the exact deadlines for this year, visit the official government portal.

Apply for Student Finance

What happens after I apply?

What Happens Next? A Guide to Managing Your Application

Submitting your application is the first major step. Now, to ensure your funding arrives on time, you need to actively manage your application through your online Student Finance England (SFE) account.

Here is your step-by-step guide:

Step 1: Get Your Application Approved

Your main focus is now on tracking the application's progress and providing any information SFE needs.

• Track Your Status: Log in to your SFE online account regularly to check the progress.

• Provide Evidence Promptly: SFE may request more evidence (e.g., proof of identity or household income). Upload any required documents immediately to avoid delays.

• Ensure Parental Support: If you applied for the means-tested Maintenance Loan, make sure your parents or partner have submitted their income details to support your application.

Step 2: Prepare for Your First Payment

Once your application is approved, you will receive a letter or notification confirming your loan amounts. Before any money can be released, you must:

• Complete University Registration: You must officially register on your course at your chosen university or college.

• Double-Check Your Bank Details: Log in to your SFE account and confirm your bank details are correct. This is where your Maintenance Loan will be sent.

Step 3: Receiving Your Funds

Your student finance is paid in two separate ways:

• Tuition Fee Loan: This is paid directly from the Student Loans Company to your university. You will not receive this money yourself.

• Maintenance Loan: This is paid into your personal bank account in three instalments, typically at the start of each term. You can view your payment schedule in your online account.

Step 4: Your Ongoing Responsibilities

Throughout your degree, you must keep your SFE account up to date. You need to inform SFE immediately if you:

• Change your name, address, or bank details.

• Change your university or course.

• Suspend your studies or leave your course.

When parent/carers need to be involved

To calculate a student's eligibility for the means-tested Maintenance Loan, Student Finance England (SFE) needs to assess the total household income. This is where parental support is required.

The process is confidential and managed directly between SFE and the parent/carer.

1. The Student Provides Contact Details
In their online application, the student will provide the name and email address for their parent(s) or carer(s) who live with them.

2. SFE Contacts the Parent/Carer
SFE will then email the parent/carer a link to create their own secure account on the SFE portal. This allows them to provide their financial information directly and confidentially.

3. Parents Provide Financial Information
Parents/carers will be asked to provide details for the relevant tax year, which may include:

• Their National Insurance number.

• Total taxable income (from a P60 or Self-Assessment tax return).

• Details of any other income (e.g., from pensions, investments, or taxable state benefits).

This information is securely verified with HM Revenue and Customs (HMRC) as a standard part of the process. You will be notified once everything is confirmed.

What If I'm an Independent Student?

SFE understands that not all students are financially supported by their parents. You can apply as an 'independent student', and your application will be assessed on your own income. This applies if you are:

• A care leaver.

• Estranged, meaning you have little or no contact with your parents.

• Meet other criteria (e.g., are married, have children, or have supported yourself for 3+ years).

SFE has specific guidance and evidence requirements for these circumstances. We recommend visiting their website for detailed information.

Student Finance England - Estranged

Find out more about the process and what you need to provide 

GOV.UK: Student finance - GOV.UK

You can also use a Student Loan Calculator.

Save the Student - Useful Tools