Student Finance: Tuition Fee and Maintenance Loans Explained

Student finance in the UK is mostly made up of two government-backed loans: a Tuition Fee Loan that pays your university or college directly, and a Maintenance Loan that helps with living costs while you study¹. They are low-interest loans authorised by the government and administered by the Student Loans Company³. In the 2024/25 academic year the Student Loans Company paid out maintenance loans and grants to 1.5 million students⁴.

The repayment system is what makes these loans unusual. You do not repay a fixed amount each month regardless of your circumstances. Instead, you repay a percentage of your income above a threshold: 9% for undergraduate plans and 6% for postgraduate loans⁵. If your income is below the threshold, nothing is taken. Whatever is left unpaid is eventually written off, after 30 or 40 years depending on when you took the loan out⁶.

What student finance covers and who runs it

Student Finance England is a service provided by the Student Loans Company, giving financial support on behalf of the UK Government to students from England, under the Education (Student Support) Regulations 2011 as amended¹. Scotland, Wales and Northern Ireland have their own funding bodies, and the rules and amounts differ: student funding in Scotland is handled through SAAS, for example.

The package of support can include Tuition Fee Loans, Maintenance Loans, Postgraduate Master's Loans, Postgraduate Doctoral Loans, and grants and bursaries that you do not have to pay back¹². The loans are the part you repay.

The Tuition Fee Loan covers the fee your university or college sets, and the money goes directly to them rather than to you¹. In England, full-time undergraduates can get up to £9,250 a year⁹, and for the 2026/27 academic year tuition fee loans of up to £9,790 a year cover course fees¹⁰. Part-time students in England can get up to £6,935 a year⁹. If the loan does not cover all of the fees, you are responsible for paying the rest¹³.

The Maintenance Loan is for living costs. It is means tested on your household income and paid on a sliding scale, so what you get depends on your individual circumstances¹⁴. Full-time undergraduates with a household income of £25,000 or less get the maximum additional Maintenance Loan¹⁴. The government publishes a student finance calculator that estimates Tuition Fee Loans, Maintenance Loans and any extra funding you might qualify for⁴.

Grants and bursaries, including support for disabled students such as the Disabled Students' Allowance, do not have to be repaid. The Student Loans Company administers the DSA scheme in line with policy set by the Department for Education in England and the Welsh Government⁹.

Repayment plans and income thresholds

When you start repaying, and how much, depends on which repayment plan you are on¹⁵. The plan is decided by when you took out the loan and where you studied, not by anything you choose later. Plans 1, 2, 4 and 5 all charge 9% of your income over their threshold; the Postgraduate Loan plan (Plan 3) charges 6%⁷.

The thresholds differ substantially between plans, and they go up each April¹⁶. The figures currently announced are:

Students who started university before August 2023 face a higher threshold than those who started from August 2023, whose threshold is £25,000¹⁴. In Wales the repayment threshold is £27,295 a year¹⁶, and in Northern Ireland you repay 9% of earnings over £26,900²⁰. For courses starting from 1 January 2027 under the new lifelong learning entitlement rules, repayments begin once you earn over £25,000 a year²¹.

You repay 9% of what you earn above the threshold, not of the loan

The single most misunderstood thing about student loans is what the 9% applies to. It is 9% of the difference between your actual income and the repayment threshold, not 9% of the loan balance¹⁵. Someone earning £30,000 on a £25,000 threshold pays 9% of £5,000, which is £37.50 a month, taken through the income tax system¹⁵.

This works the same whichever undergraduate plan you are on: the amount you repay is 9% of the difference between your actual income and the threshold¹⁵. Official statistics confirm that repayments for Plan 1 and Plan 2 loans are at the rate of 9% of income above the income threshold⁷. If your income falls below the threshold, your loan payment is automatically deferred each year, and you cannot negotiate lower payments¹¹.

If your income varies over the year, it is possible that your total for the tax year will fall below the repayment threshold even if your earnings exceeded the weekly or monthly threshold in some months. In that situation you can claim a refund of the excess²³.

Postgraduate Loan: 6% above the threshold

Postgraduate Master's and Doctoral Loans work on their own plan, usually called Plan 3. You start repaying when your income is over the threshold amount²⁴, which from April 2026 is £21,000¹⁷. The rate is 6% of your income above the threshold⁷, and official statistics confirm Plan 3 repayments are at 6% of income above the income threshold⁷.

If you have both an undergraduate loan and a postgraduate or PhD loan, the two are paid concurrently rather than combined. This means you may find yourself repaying up to 15% of your income: 9% for the undergraduate loan and 6% for the postgraduate or PhD loan²⁵.

One point worth knowing if you receive means-tested benefits: a Postgraduate Loan for tuition fees is not counted as income, and for postgraduate students generally, 30% of a degree loan is taken into account as income when benefits are worked out²⁶.

How repayments are collected

For loans taken out from September 1998 onwards, repayments are usually collected by HM Revenue and Customs (HMRC) through your employer, taken from your wages before you get them¹⁵. If you are self-employed, you repay through your self-assessment tax return¹⁵. You do not need to arrange anything yourself: the deduction appears alongside income tax and National Insurance, and how PAYE works is covered in our guide to starting your first job.

If you move abroad, you must tell the Student Loans Company so you pay the right amount²⁷. Outside the UK tax system you repay the Student Loans Company directly rather than through HMRC¹¹. You are still expected to keep repaying unless you can give proof, for example a recent bank statement, that your overseas income is below the threshold¹⁵.

You can make voluntary extra repayments in your online account and by card, bank transfer or cheque¹⁵. Two cautions apply. The Student Loans Company does not refund voluntary payments unless you had already finished repaying the loan and the payments were in fact overpayments²³. And if you have repaid your loan but deductions continue, write to the Student Loans Company with your wage slips showing the extra deductions: overpayments are refunded with interest²³.

Interest follows inflation for as long as the loan lasts

Interest on student loans is linked to inflation, so it can go up and down, and it is applied for as long as the loan lasts¹¹. Loans accrue interest from the date they are paid out until they are repaid in full²⁰, and interest is charged from the moment you take the loan out, even while you are still studying¹⁴. Under the lifelong learning entitlement rules, interest runs from the day the first payment is made to you or your provider until the loans are repaid in full or written off²¹.

How the rate is set depends on the plan. Student loan interest rates are set annually on 1 September using the Retail Price Index (RPI) inflation figure from the previous March, which was 4.3%¹⁶. For Plan 1 and Plan 4 the rate is the lower of RPI or the Bank of England base rate plus 1%¹⁶. Plan 2 is different: while your income is the same as or above the higher repayment threshold, the rate charged is RPI plus 3%²⁸. The higher interest threshold for Plan 2 loans applying from April 2026 is £52,885¹⁷. The interest rate usually applies from 1 September to 31 August each year²⁰.

Old fixed-term loans use a similar principle: the interest is linked to inflation and adjusted in line with RPI, calculated daily from the date the loan started and added to the account at the end of each month¹¹.

When the loan is written off

Every student loan is eventually written off if you have not repaid it, and the period depends on when you took it out. For Plan 2, any loan you still owe 30 years after your repayments were due will be written off¹¹. For Plan 5, the balance is written off 40 years after the April you were first due to make repayments⁸, and under the lifelong learning entitlement the same 40-year rule applies²¹. Students who started before the 2023 change had outstanding debt written off after 30 years¹⁴.

Plan 1 has age-based rules: if you took out your first loan during or before the 2005/06 academic year, any remaining loan is written off when you reach 65; if your first loan was in or after 2006/07, any loan not repaid is written off 25 years after you started repayment¹¹. Any outstanding balance on a PhD loan is written off 30 years after the loan first becomes due for repayment²⁵. A new-style loan may also be written off if you can prove you are permanently unfit for work²⁰.

Leaving or pausing your course

Dropping out does not cancel the debt. You still have to repay your student loan if you leave your course early¹⁵. How much you need to repay and when depends on what type of student finance you have, when in the academic year you leave, and whether you plan to return¹².

If you leave or suspend your studies you must stop your student finance¹². If you received more of any type of student finance than you were entitled to, you will have to repay the overpayment¹⁵. The practical steps are to notify your university or college and the funding body promptly, because finance continuing to be paid after you have left usually becomes an overpayment you owe back.

Fixed-term loans taken out before 1998

Before the current system existed, the Student Loans Company introduced fixed-term student loans in 1990¹⁹. These were replaced by the new-style income contingent student loan system in 1998¹⁹. If you borrowed between 1990 and September 1998, your loan works completely differently from everything described above.

Repayments on these loans were usually made over five years by monthly direct debit, unless you deferred or fell behind²⁰. Although they were originally looked after by the Student Loans Company, these pre-September 1998 loans were later sold to three private sector companies: Erudio Student Loans, Honours Student Loans and Thesis Servicing¹¹. Old-style loans are regulated by the Consumer Credit Act 1974¹⁹, which gives you rights that the newer loans do not, including protections around enforcement.

Deferring a fixed-term loan: up to £41,613 a year

Deferment means postponing your fixed-term loan repayments for a period of 12 months¹⁹. Repayments can be deferred for a year at a time if your income is below the threshold, which is set at 85% of national average earnings¹⁹. Under the rules in place from 1 September 2025 to 31 August 2026, if your gross income is £3,467.75 or less per month, equivalent to £41,613 per year, you may be eligible to apply¹¹.

To apply, you provide proof of your gross income, or evidence of how your living costs are covered if you are not employed or receiving benefits. Only your own income is taken into account: no income details of a spouse, partner, parents or other relatives are needed¹⁹. Interest continues to be charged on the outstanding balance during the 12-month deferment period, and when it ends you are given the opportunity to apply for a further 12 months¹⁹.

Where missed payments lead: arrears, credit files and court

Fixed-term loans are the only student loans where falling behind has conventional debt consequences. Unless you have deferred payments or are keeping to a repayment arrangement, after 28 days your account will be registered with a credit reference agency¹⁹. Missed payments, defaults and court judgments stay on a credit file for six years²⁹. Loans taken out after 1998 are different: they are not recorded on your credit report²⁹, and details of student loans awarded after 1998 are excluded from credit files²⁹.

If you default, the collection company may pass the debt to collection agents. Debt collectors are not bailiffs or sheriff officers and have no power to enter your home²⁰. Enforcement goes through the courts: in England and Wales the collection company would need to obtain a county court judgment, which they could then enforce if you do not pay¹¹. In Scotland, enforcement is carried out in the Sheriff Court, where the company needs to obtain a decree, which could then be enforced through measures such as an earnings arrestment¹⁹.

In Scotland, old-style mortgage student loans are Consumer Credit Act agreements, and time limits can apply if you have not paid or acknowledged the debt for over 5 years³². If you are being chased for a very old loan, it is worth getting free debt advice before making any payment, because acknowledging or paying a statute-barred debt can restart the clock.

Student loans in bankruptcy, trust deeds and IVAs

Student loans are not included in bankruptcy or trust deeds, so the loan would not be written off by either form of insolvency¹¹. The same broad principle applies to individual voluntary arrangements: student loans are excluded from IVAs approved on or after 6 April 2010. If your IVA was approved before that date, your student loan would have been included, provided you got the loan before the IVA approval date¹¹.

For the old fixed-term loans there is a specific date to know: since 1 July 2004, fixed-term student loan debt is not written off at the end of a bankruptcy²⁰. If you are considering any form of insolvency, assume your student loan will survive it and take advice first: our debt guide explains the options and where free help is available.

Where to get free help

Free, independent advice on student loans and any other debt is available from several charities. National Debtline covers England and Wales and Business Debtline covers Scotland, and both publish detailed guides on repaying student loans¹¹. StepChange, a debt advice charity, covers student loan debt and how debts affect your credit file⁵. Citizens Advice can explain the jargon and your rights under the Consumer Credit Act².

For questions about your specific loan, the Student Loans Company holds the account for all loans from 1998 onwards, and GOV.UK sets out the current thresholds, rates and rules for each plan¹⁵. If you have an old fixed-term loan, contact the company that holds it: Erudio Student Loans, Honours Student Loans or Thesis Servicing¹¹. For wider money questions around study and beyond, our life events guide covers the financial changes that come with each stage.