Student finance: what you actually need to know
Student finance can sound complicated, but the basics are simpler than you might think.
The two types of loan
There are two loans you can apply for:
- Tuition fee loans cover the cost of your course. The money goes straight to your university and you never see it in your bank account. In England, fees are currently up to £9,250 a year.
- Maintenance loans are paid directly to you, in instalments at the start of each term. This is money to live on, including: rent, food, transport, course materials, and everything else that comes with student life.
How much maintenance loan you get depends on your household income – usually your parents’ or guardians’ earnings. The higher their income, the lower your maintenance loan is likely to be. This is called means-testing.
What about Scotland, Wales and Northern Ireland?
Student finance rules differ across the UK:
- Scotland: Tuition is covered by SAAS for Scottish students studying in Scotland. You can still get a loan for living costs.
- Wales: Tuition fee loans and maintenance support are available through Student Finance Wales.
- Northern Ireland: Works similarly to England, but with different thresholds and terms through Student Finance NI.
Make sure you check the specific rules for your nation.
Worth knowing before you apply…
You don’t have to take out the full maintenance loan amount – you can borrow less if you want to. You can’t reduce the tuition fee loan though, as that’s fixed.
Your student loan account is private. Your parents won’t be able to see your details. However, if you’re under 25, Student Finance will usually need your parents’ income information to calculate your maintenance loan entitlement even if you don’t live with them. There are exceptions (for example if you’re financially independent, married or estranged from your parents), so check the guidance for your situation.
If you drop out or change courses, you only pay for the years you actually study. Any maintenance loan already paid to you is yours to keep, but future payments will stop.
Budgeting at uni: make your money last the whole term
Once your maintenance loan lands in your account (usually at the start of each term), it can feel like a lot of money. But it has to stretch a long way often three or four months at a time.
Having a budget helps you balance what’s coming in against what’s going out. It means fewer nasty surprises and more control over your money.
Start with your income
Write down everything you expect to receive each month:
- Maintenance loan (divide your term payment by the number of months in the term)
- Any part-time job earnings
- Scholarships or grants
- Financial support from family
Then list your outgoings
Think about both fixed costs (rent, bills) and variable ones (food, going out) per month, things like:
- Rent
- Utilities (electricity, water, internet etc)
- Food and groceries
- Transport
- Course materials
- Social activities
- Subscriptions (gym, streaming services)
A realistic example
Here’s what that might look like in practice:
| Income per month | £ |
| Maintenance loan | 700 |
| Part-time job | 300 |
| Scholarship/grant | 100 |
| Family support | 200 |
| Total income | 1,300 |
| Expenses per month | £ |
| Rent | 700 |
| Food | 200 |
| Transport | 50 |
| Course materials | 50 |
| Social activities | 150 |
| Subscriptions | 50 |
| Total expenses | 1,200 |
That leaves a surplus of £150 which rolls over into next month. It’s helpful to have a buffer in case unexpected costs come up, put in your savings, or use some of your surplus to put towards something special.
The key is to keep track of everything including one-off purchases like nights out or new clothes. Before buying something, ask yourself: do I need this, or do I just want it? It’s a simple question, but it makes a real difference and can help avoid impulse buying.
Tips to make your money go further
There are lots of ways to stretch your budget without cutting out everything fun. A few that work well for students:
- Food and groceries: Never shop when you’re hungry. Try dropping one brand level on what you buy regularly, you often won’t notice the difference. Batch-cooking meals and freezing them saves both time and money. You can also use food waste apps like Too Good To Go to get cheap/discounted leftover food from cafes, shops and restaurants.
- Eating and drinking out: Meet friends for lunch rather than dinner – many places offer cheaper set menus at lunch time. At restaurants, tap water is always free.
- Shopping: Always carry your student ID and ask if there’s a discount. Sites like MyUniDays are great to sign up for to find discount deals. Check out second-hand shops and try clothes swaps with friends, you’d be surprised what you can find in charity shops and borrowing from friends gives your wardrobe a cost-free refresh! Refurbished tech is another great avenue to explore if you need a new phone or laptop, you can save a significant amount on lots of tech kit.
- Entertainment: Free museums, outdoor events and community activities are everywhere once you start looking. Host a film night in rather than going to the cinema. Rotate streaming subscriptions one at a time rather than paying for several at once.
Find out more: https://moneyready.org/library/budgeting-for-uni/
There are helpful tools online too, like the Save the Student budget calculator.
Repayments: what happens after graduation
This is the part that often worries people most, but it’s also the part that’s most misunderstood.
Here’s the key thing with student loans: you only start repaying when you’re earning over a certain threshold. In England, that’s currently £25,000 a year. Earn below that? You don’t pay a thing. No phone calls, no missed payments, no impact on your credit file.
Your repayments are based on what you earn, not what you borrowed. Let’s say you earn £28,000 after graduating. You’ll repay 9% of everything above £25,000 – that’s £270 for the year, or about £22.50 a month. It comes straight out of your payslip automatically, just like tax.
Student loans also get written off after a set number of years. The exact timeframe depends on which plan you’re on and when you started, but it’s often 25-40 years after your first repayment was due.
What about interest?
Interest rates on student loans can sound alarming. Your balance might actually grow while you’re repaying it, depending on which plan you’re on and your income. But this doesn’t change your monthly payments, you still only ever pay 9% above the threshold. It can feel frustrating to see the total going up, but it doesn’t affect your day-to-day finances.
Will a student loan affect my mortgage or credit score?
Student loans don’t appear on your credit file like a credit card or other debt. They won’t stop you getting a mortgage. Lenders do factor in your repayments when calculating affordability but that’s true of any regular monthly commitment.
“The language around student finance often sounds scarier than it needs to be. When people understand it’s income-contingent, meaning you only pay based on what you earn, that anxiety starts to lift. You’re not going to be chased for money you don’t have.” Georgia Markou, The Brilliant Club
Summary
Getting financially ready for uni doesn’t mean having it all figured out. It means knowing enough to make confident decisions and knowing where to turn when things feel unclear.
To recap:
- Student finance is made up of two loans: one for tuition (paid to your university) and one for living costs AKA maintenance (paid to you). Your maintenance loan is means-tested based on household income.
- Budgeting for uni is about balancing what comes in against what goes out. Make a plan at the start of each term and track your spending throughout – your loan has to last until the next one arrives.
- Repayments only kick in once you’re earning above the threshold after graduating. They’re automatic, income-based, and get written off after a set number of years.
If you ever find yourself struggling, your university’s student services and hardship funds are there to help. Free, confidential advice is also available from Citizens Advice and the National Union of Students.
At Money Ready, we believe financial education should be a right, not a privilege. The more you know now, the more confident you’ll feel later.