Affording higher education

As a team, we hear the words ‘I can’t afford to go to HE’ or ‘We can’t afford to send my child to University’ a lot, and although we do understand that the idea of a ‘loan’ and paying over £9,000 a year can seem very off-putting and scary, we want to assure you that the student finance system is very different than any other loan scheme you will have heard of before, and we want to reassure you that, with this finance system, ANYONE can afford to go into higher education.

Key Words and Definitions

Before we go into detail about what student finance is, and how it works, it’s useful to define some key terms that we will use when explaining the system. Some you will be familiar with, and others may be new.

  • Fee – an amount of money that must be paid to an organisation
  • Loan – an amount of money that is borrowed, that must be paid back, usually including interest
  • Interest – the additional cost of borrowing money
  • Means-tested – when the details of household income are used to determine how much money someone can borrow
  • Bursary/Scholarship/Grant – a sum of money is given to a student that does not have to be paid back.
  • Repayment – this is the process of paying back the loan/money that is borrowed

How does student finance work?

Watch this short video to give a brief overview of student finance in England:


 If your child starts a higher education course, there will be two costs associated with it:

  1. Tuition fees – the amount of money that you child pays, per year, for their university course. This cost is determined by the institution and is currently set at a maximum of £9,250 per year of study
  2. Living costs – this is the amount of money that your child will need to live, and  includes things like  accommodation, travel, food, clothes, and other essentials

Although these are the costs associated with going into higher education, neither students nor their parents are expected to be able to pay for these up front. Student Finance England is a service that provides financial support on behalf of the UK Government to students who are entering higher education in the UK. Students will therefore be able to apply for the following loans that will support them through higher education…

  1. Tuition fee loan
  2. Maintenance loan

What is a tuition fee loan?

A tuition fee loan is a non means-tested loan that covers a student’s full tuition fee for each year of their undergraduate study. This money will cover things like lectures, seminars, use of the library, use of equipment, etc. This money is paid directly to the university, so a student will never the see the money or need to worry about missing a payment deadline. This money will need to be paid back. See the ‘Repayment’  section below for more information.

What is a maintenance loan?

A maintenance loan is another form of loan that students can apply for, that will help with their living costs during university, and will cover things like accommodation, travel, food, and other essentials. Maintenance loans are paid in three (almost) equal instalments throughout the year  at the beginning of each semester.

These loans are means-tested, which means that the amount a student  can borrow depends on their  household income. This works on a sliding scale, so students whose household income is lower will be eligible for more maintenance loan, and vice versa. This system ensures that students who need extra help will get that support.  ‘Household income’ refers to what you, and where relevant, the partner that you live with, earn annually.

Other elements that determine how much maintenance loan a student is eligible to receive are  whether they will  be living at home or not, and whether they will be living/studying in or outside of London (to mirror the increased living costs in London).

Take a look at this table which explains the maintenance loans available for students going into higher education in September 2021. 


Household Income

Living at home

Living away from home (Outside London)

Living away from home (In London)

Less than £25,000








































Repayment of Student Loans

Watch this video for a brief overview of student finance repayments made by Student Finance England (SfE):


The student loan repayment system is likely to be very different than any other loans that you will have come across. This is why it is often referred to as a ‘Graduate Tax’. Students will only begin to pay back their student loan once they are earning above the annual threshold of £25,725 (£2,143 a month/£494 a week), and this will automatically come out of their salary, so they don’t have to worry about paying it themselves (just like tax!). If their salary were to drop below this threshold, then the loan repayments will automatically stop. Students will only pay back 9% of what they earn above the threshold (so NOT 9% of their total income). The amount they pay back is always 9%, no matter how much they borrowed.

The table below shows the repayment thresholds for student loans (post-2012) and can be viewed as part of a larger article on student finance on the Which website here

Annual income Amount of income that repayments (9%) will be deducted from ie threshold (£25,725) minus annual income Annual repayment
Up to £25,725 £0 £0
£30,000 £4,275 £385
£35,000 £9,275 £835
£45,000 £19,275 £1,735
£55,000 £29,275 £2,635

After 30 years, any debt that hasn’t been paid will be written off, even if  students haven’t paid anything during that time. Studies show that approximately 17% of students will repay their student debt in full.

Although repayments only start once they’re earning over the minimum threshold, they will be charged interest from the day they first receive their student loan. This is set at RPI (Retail Price Index) + 3% until the April after they’ve completed the course. After this, the interest will vary depending on what they’re earning.

Will a student loan affect my child’s credit rating?

Student loans don’t affect credit ratings, because student loans aren’t included in a credit reference file. This means that it won’t affect your child’s likelihood of getting a mortgage. It’s also worth noting that, because repayment is dealt with via your salary, your child will never be able to fall behind with repayments.

What additional financial support is available?

So far, we have only talked about the support provided by the government. Nevertheless, most universities will offer various forms of financial support too, particularly (but not exclusively) to students from lower income families. The most common examples are bursaries, scholarships, and grants that help with some or all of a student’s tuition fees or living costs. These do not have to be paid back.

But what’s the difference?

  1. Scholarships – These are designed to help with some living costs or tuition fees, and are based on an achievement or excellence in academics, music, or sport. These are offered by universities/colleges, employers or organisations.
  2. Bursaries – These are in place to help with some living costs as a one-off payment, and are based on low household income or personal circumstances (disabled students, students from particular religions or countries). They are offered by universities/colleges, employers or organisations.
  3. Grants – These are to help with some living costs, or for a specific purpose (e.g. studying abroad) and are based on low household income, background, or personal circumstances. These are offered by charities or trusts that represent underrepresented groups.

When applying to a higher education institution, your child  should always consider the financial support packages that they offer because all universities differ. To find out about the financial support package that the University of Manchester offers, follow this link  or watch this webinar to get a deeper understanding of student finance at the University of Manchester.

For more information about what you’ve read on this page, and to understand how your child can apply for student finance, please follow these links:

Your child could be eligible for a range of access schemes and programmes designed to help them get acquainted with university style learning before they attend a HE, and may even be able to receive a reduced offer in entry requirements to university courses. Continue reading the ‘Additional support applying to HE’ section to find out more.

Additional Support Applying to HE

Explore additional support available when applying to HE.

Read more