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Student Loans Explained

Student loans have been hitting the headlines again recently. In fact, this is one area of personal finances that regularly appears to be in the news. Many people are understandably confused by the ever-changing situation here.

The Student Loans Company (SLC) are responsible for administering loans here in the UK. Their website provides detailed information on the options available to students. The situation does seem to be very complicated and is not helped by the fact that there are regional variations at work here too.

But let's take a closer look at the basics.

Tuition Fee Loans

As the name suggests, these loans are intended to help with the cost of tuition fees. As you'll be aware, there are plans in the pipeline to increase the tuition fees that universities are able to charge students.

Tuition fee loans are paid direct to the Higher Education establishment, so the individual student doesn't come into contact with the money. A student can choose to apply for all, or part, of the cost of their tuition. But that money obviously needs to be paid back.

Repayment is made via the income tax system. Basically, a student will not start to repay the loan until they leave Higher Education and find employment. Even then, repayments are not made until the individual earns above a certain threshold (which is currently, in January 2011, set at £15,000).

Interest is charged on these loans. The interest rate may change because it is linked to the interest rates charged by the UK's leading high street banks.

Maintenance loans

Many students will have both a Tuition Fees Loan and a Maintenance Loan. The latter is intended to cover living costs for the student. Unlike the Tuition Fees Loan, the Maintenance Loan money is received by the individual student.

The amount that you are entitled to does vary, depending upon a number of factors (such as place of residence and year of course).

Maintenance loans are paid directly to the student in 3 installments.

Repayment of maintenance loans is based on the Income Contingent Repayment (ICR) scheme - you can't beat a good acronym! It basically means that, just like with the tuition fees loan, the individual starts to pay back the loan once they earn above a certain threshold.


Although this article focuses on loans, it's worth pointing out that there are also a range of grants available. It's worth checking to see if you are eligible for these. At the current time, available grants include:

  • Tuition Fee Grant
  • Part-Time Fee Grant
  • Maintenance Grant
  • Welsh Assembly Learning Grant
  • Special Support Grant
  • Higher Education Grant
  • Higher Education Bursary (Northern Ireland)
  • Part-Time Course Grant
  • Welsh Assembly Learning Grant (Further Education)

As you can see, the grant situation is a whole new story. The best place to get a detailed breakdown of what's involved (and what's available) is on the Student Loan Company website.

More about loans

Our main personal loans section offers information on other types of loans.