Question on student loans/ interest

Im not too sure how student finance/loans work, at the moment im thinking of staying at home for university as my uni is close to me, so will I need to apply for a loan to cover my tuition fees? if yes, what is the interest on it?
Also I am seeing 'maintenance loan' available to me, I dont think I will need it but if I was to get it is the interest on it the same as the tuition fee loan?

Reply 1

artful_lounger

Universities Forum Helper

Hi, I've moved your thread to the student financial support forum :smile:

The Ask SFE Forum is for queries specifically for SFE official representatives to answer issues about applying to student finance etc. They aren't able to provide general advice about whether to take out a loan or not.

For your questions about interest, you can find this here: https://www.gov.uk/government/publications/student-loans-a-guide-to-terms-and-conditions/student-loans-a-guide-to-terms-and-conditions-2025-to-2026

For whether or not you should applying for student finance, this is ultimately a personal choice, however realistically UK students who don't have religious/cultural barriers to applying to loans from SFE (as they are not Sharia compliant loans) normally will always apply for a tuition fee loan at minimum if eligible. This covers all tuition fees and is automatically paid to the university. Bear in mind a) the tuition fee cap is rising next year slightly and b) this is about £9000+ a year - which is a very large sum of money.

For maintenance loans, whether to apply for it, particularly when staying at home, depends on your needs. Bear in mind if you are living in your parental home, you will only be entitled to a reduced maintenance loan. However equally bear in mind, without a maintenance loan you will need to self fund all your costs for e.g. supplies, books, travel, etc, even if you aren't paying rent or for food and similar.

Also bear in mind that student loans have extremely low interest rates and the structure of how they are repaid means they're essentially impossible to default on (short of willfully committing tax fraud). Additionally, you only ever repay a proportion of your income and only when earning over the threshold, which means you'll never repay more than you can afford; if you're a PAYE worker (i.e. not self-employed or similar) this is just worked out by your employer's payroll department with your NI contributions and income tax etc. It also does not impact your credit score to have the loans taken out. Finally, the loan is written off after a set amount of time anyway.

Practically it's functionally a graduate tax rather than a loan like a bank loan, and it's worth noting 10 or so years ago, there were a spate of articles about how rich students were taking out the maintenance loans even though they didn't need them, just to invest them because they could make better returns than the interest rates on them. This is probably indicative of just how valuable they are. I would personally strongly recommend always applying for the maximum loans you are entitled to. Even if you don't need the maintenance loan immediately, you can save it and use it as the basis of e.g. a deposit to buy a house after you graduate or something.

You can read some more info about student loans from SFE here (the article is slightly old so the write off period is longer now, but is mostly accurate): https://www.gov.uk/government/news/8-things-you-should-know-about-your-student-loan--2