Student loans are designed to help students meet the financial demands of full-time higher education courses such as graduate or post-graduate degrees.
In the UK, student loans are provided by banks as well as by the UK Government. Government student loans have a lower rate of interest than other traditional personal loans and are unaffected by student grants for those able to receive them.
N.B. Unlike a student grant, a student loan must be repaid.
Eligibility for a UK Student Loan
There are two factors determining the success of any student loan application in the UK:
- Personal eligibility
- and Institution eligibility
Personal Student Loan Eligibility
In order to be personally eligible for UK student loans the student must meet UK immigration and/or UK residency conditions. Nationality may also play a part in this as may the age of the student. The student’s loan eligibilty is determined at the beginning of the course.
Institution Eligibity for Student Loans
The type of qualification as well as the educational establishment at which the course is offered is also a factor in the approval of any student loan application.
How Do UK Student Loans Work?
A UK student loan from the UK Government is comprised of a loan to cover the cost of the course itself (i.e. tuition fees) and a loan to help cover student living costs. Upon successful application a UK student loan accrues a rate of interest equal to the UK inflation rate.
Student loan repayment does not begin until the qualifying student has left the course for which the loan was required and when the recipient of the student loan reaches an annual income of £15,000. At this point the loan is repaid via Income Contingent Repayment. ICR occurs automatically via the UK taxation system, with the amount of the monthly repayment calculated according to the income of the borrower.
Student Loan Applications
Student loan applications should usually be lodged prior to the commencement of the academic year. In the case of an under-graduate student loan applications should be made prior the start of the course if the loan is required for the first year. Having said this students can apply for a student loan up to 9 months following the commencement of the academic year.
As with any loan agreement student loan applicants will be expected to provide personal information that can be used to verify the validity of the applicant and to help calculate the amount of loan to which the the student is entitled.