Millions of students are starting life at university this month, but they could learn important lessons from graduates who have been left with high levels of debt from student loans after completing their courses.
A student loan may be essential with the “rough cost” of a three-year course at £70,482 per year for tuition, books and living expenses, said Save the Student.But funding can have an adverse effect after graduation and some have even complained that they have been mis-sold their loan.
Much of the criticism is aimed at changes to the earnings threshold when repayments become due and interest is charged, which MPs on the Treasury Committee claim amounts to “mis-selling”.
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What is a student loan?
Tuition fees are capped at £9,790 a year in England and Wales. The figure went up by £255 this year, having risen by £285 in 2025, the first increase in eight years.
However, this is not an up-front cost, and instead student loans can be used to cover the educational aspect and some living costs while at university.
There are two parts to a student loan. The first covers tuition fees “equal to the annual cost” of a course, said the BBC, which is paid directly to the university.
The second is an optional maintenance loan that is paid directly to the student’s bank account in three instalments to subsidise the general cost of living. A maintenance loan is supposed to “help out” with costs like rent, travel and food, but the “way you allocate this money is your decision”, said Whatuni.
Unlike the tuition fee loan, the maintenance loan is means-tested and depends on your parents’ income and whether you go to university in London.
The maximum maintenance loan for students who stay at home with their parents is £9,118, rising to £10,830 if you move out and study outside of London. Students who attend university in London while living away from home can get up to £14,135.
You can apply for one or both types of loan, and whatever is borrowed is then combined into a final total that’s repaid once the student finishes their course.
The Student Loans Company is scheduled to pay approximately £2.6 billion in maintenance support to 1.1 million students this September but the government is warning that scammers use this busy payment period to send convincing text messages, emails, or make phone calls “claiming that a student’s payment is at risk”.
Who can get a student loan?
To get a student loan, you “must be studying at a recognised or listed college or university”, said The Uni Guide, and you need to be a UK national or have settled status.
Student finance is typically only paid for a first undergraduate course, even if a previous course has been self-funded.
There is no age limit for the tuition fee loans but there may be limited funding for the maintenance portion if you are over 60.
How to get a student loan
You need to apply for student finance through the student finance body in your country.
Those from England must apply through Student Finance England, while the equivalent in Scotland is the Student Awards Agency for Scotland (SAAS), with Student Finance Wales and Student Finance NI in Wales and Northern Ireland.
You can apply up to nine months after your course starts, but “you might get less money than you expected” if you apply too late, said Gov.uk.
How a student loan works
Once your loan is approved, interest is charged while you study – “before you graduate and look to start paying it back”, said The Times.
Don’t panic though, as it “does not work like a bank loan”. Instead, student loans are often thought of as a “graduate tax” as the Student Loans Company only starts to take some of your earnings once you start earning a specific amount.
When do you repay a student loan?
A student loan is deducted automatically through your employer’s payroll. But the amount a person repays is dependent on “which of the five different repayment plans you’re on”, said This Is Money.
Anyone who started university since 1 September 2023 is on Plan 5 and needs to repay the loan once earnings go above £25,000, with 9% interest charged on earnings above this threshold. The more a person earns, the more they will need to repay each month.
Why are people angry about student loans?
Graduates have complained that the student loan debt makes “affording a mortgage more difficult, exacerbates cost-of-living concerns and makes parents feel penalised for taking leave for having children”, said The Independent, while campaign groups claim there are “hallmarks of mis-selling”.
The “worst hit”, said the Financial Times, are those on Plan 2 student loans, which were in effect between 2012 and 2022.
The repayment threshold for those on Plan 2 loans rose from £28,470 per year to £29,385 in April this year and will be frozen at that level until 2030.
Consequently, middle-income graduates are now seeing “less than half of any pay rise”, said The Sun, as it is swallowed up by income tax, National Insurance and student loan repayments.
Graduates now need to earn £63,000 a year to begin reducing their student debt. Even tens of thousands of the first students to take out loans still have debt outstanding almost 30 years later, said The Times, meaning “their student debt has followed them through most of their adult lives”.
But while there may be fear that “enormous interest payments could balloon a loan to unmanageable levels”, personal finance analyst Alice Haine told Evelyn Partners, in reality, “many people will never repay the full amount”.
Student loans are not recorded on a person’s credit file, but “can be taken into account” for affordability checks when applying for loans such as a mortgage, said MoneySavingExpert. The debt is also wiped out after 40 years, or if you die or are “permanently incapacitated”.
