Preparing to send a family member away to university can be a stressful time.
In particular, navigating funding options can prove confusing, leading to families feeling overwhelmed. But worrying about the cost of higher education need not be a burden.
Below, we’ve created a guide for parents that outlines the student funding options in the UK to help you make an informed choice. You can also download our Parent’s Guide as a PDF here.
How much does university tuition cost in the UK?
Tuition fees vary throughout the UK. In England, universities and colleges can charge up to £9,250 a year for tuition fees for both UK and EU students doing an undergraduate degree. In Scotland, tuition is either free or costs up to a maximum £1,820 if they are from Scotland or the EU. Students from England, Wales or Northern Ireland pay £9,250 per year.
In Northern Ireland, tuition costs up to £4,275 per annum for national and EU students; students from the rest of the UK will pay the £9,250 amount. In Wales, tuition is capped at £9,000 per year for national students as well as those from across the UK and the EU. Fees for international students vary across all four countries but start from around £10,000 per year and can be considerably higher than for domestic students.
By the time a student leaves university, the average total of debt a student accrues in England after a three-year undergraduate degree is £50,000 (which includes both tuition and living expenses).
What is the typical cost of living for a student in the UK?
Obviously, the cost of living varies based on the location of the university. For example, rent is going to be more expensive in London than in Warwick.
That being said, the average monthly cost of living for a student in the UK is around £800, or roughly £9.5k a year, with this rising again when you get into metropolitan areas such as London or Manchester.
What government-funded loans are available to UK students?
For UK students seeking to fund their studies, government-funded loans from the Student Loans Company (SLC) should be the first port of call. These loans can help cover both tuition fees and maintenance costs.
Below is a breakdown of the two government-funded loans offered.
Tuition fee loan
Many students in the UK enrolling in their first undergraduate degree are eligible for a tuition fee loan which covers the cost of the degree. In this scenario, Student Finance will pay upfront tuition costs and pay them directly to the university each academic year (this offering is not means tested, which is to say that the amount awarded does not depend on how much you earn as a parent. Moreover, the relevant government bodies will vary based on whether you are in England, Scotland, Wales or Northern Ireland).
A maintenance loan refers to the money lent to students to cover their living expenses while studying. This loan is deposited directly into your child’s bank account in three installments throughout the year for each term.
Unlike a tuition fee loan, this offering is means tested, meaning it is calculated based on how much the student’s parents earn. In other words, the higher your household income, the less the government will award to fund maintenance costs.
The exception is if you have more than one child attending university, which can be taken into consideration. Unfortunately, the assumption tends to be that parents can cover the financial shortfall, despite this not always being the case. Unofficially, parents are expected to subsidise government maintenance loans. As these loans are based upon where the student will attend university, whether they will live away from home while studying and how much household income is earned, parents with a higher income are expected to contribute more to student living expenses.
Other factors that play into the amount awarded for a maintenance loan include whether your child stays at home or moves away to attend university or whether they are enrolled at an institution in London where costs of living are substantially higher. But, on average, parents can be expected to help with up to £222 per-month.
|CHEAPEST||Cost of rent per week||Cost of a meal||Cost of taxi from campus to city centre|
|University of Manchester||£75||£12||£3.50|
|University of Nottingham||£105||£12||£5.50|
|MOST EXPENSIVE||Cost of rent per week||Cost of a meal||Cost of taxi from campus to city centre|
|Royal Holloway University of London||£116||£7.50||£50|
|King’s College London||£150||£15||£10.50|
How can I calculate the amount my child will be awarded for their tuition fee loan and maintenance loan?
The amount your child is eligible for will depend on where they are studying, whether they are in postgraduate or undergraduate study, the type of course they are doing, where they are living, how much household income there is within your family, whether they will be living out of home and other factors.
For example, an undergraduate will be entitled to the full tuition fee loan (£9,250 for the 2019/ 2020 academic year). If they are living at home, they will also be entitled to a maintenance loan up to £7,259 dependent on family circumstances. This number rises to £11,672 if they are living away from home and in London.
There are also a number of additional funding options for students based on their situation, including assistance from the university, help if your child is experiencing financial hardship, support for students studying abroad and extra funding for students with needs such as learning difficulties or disabilities. Always check what options are available to your child from both their university and the government before exploring additional funding options.
To estimate how much you can expect your child to receive in funding based on your specific circumstances, you can use the Student Finance calculator.
When is the deadline to apply for Student Finance for undergraduates?
Applications to Student Finance for tuition fees must be completed at least 8 weeks before the date courses begin; applications for maintenance loans can be applied for up until 9 months after the course has started.
Students can apply and find more information on student funding at the following links:
How are repayments for Student Finance structured?
Tuition fee loans and maintenance loans are added together into a single amount borrowed, payable once the student has graduated over a 30 year term. The respective Student Finance provider in each country manages this amount borrowed. Your child will begin making repayments from the first April after he or she graduates and only if they’re earning above the defined threshold.
For 2019/ 2020, in England and Wales, this limit is £25,725 a year; in Scotland and Northern Ireland, it’s £18,935. From April 2020, this threshold will rise to £26,575 for England and Wales and to £19,390 for Scottish and Northern Irish graduates.
The current interest rate for students who started university after 2012 and are currently studying is 5.4% (this is made up of the Retail Price Index, which is 2.4% as of January 2020, plus 3%). Once a student graduates (from April 5 after finishing their course), the rate is 2.4% (RPI only) once earning under the threshold. Once earning over the threshold, the interest rate increases again to 5.4% (RPI plus 3%).
If earning below the income threshold, graduates will not make repayments. If a graduate starts earning above the repayment threshold, 9% of any income earned above that amount will be repaid. For example, if a graduate in England is earning £35k per-year, then he or she would pay 9% of £8,425 (their earnings above the threshold) which is £758.25 a year or approximately £63.18 per month. These payments are automatically deducted from students’ monthly payslips once they graduate and are earning above the defined amount.
Don’t forget:The amount accrued as interest is added to the total amount borrowed and the term length is 30 years and the outstanding debt will be written off after that length of time.
Do government-funded Student Finance loans really provide enough to attend university?
In many cases, government-funded loans insufficiently cover rising tuition fees (especially for postgraduates and international students) and the high cost of student living and accommodation.
And the problem is widespread. According to a recent Future Finance and YouGov survey, only 33% of students reported that government funded loans were enough to cover full tuition and maintenance fees.
So how big is the gap? It is estimated that for the typical undergraduate student, the funding gap is £3204 per year or £267 per month for living expenses. This amount raises again for postgraduates and international students who feel the shortfall across both tuition and living expenses.
What can my child do to help pay tuition fees and living expenses?
You should encourage your child to start a savings account while at school to use for funds they will need for university. You can contribute to the account, but also remind future students to always try to save a portion of whatever cash they earn or receive, especially in the years running up to the beginning of their course.
Part-time and summer jobs
Many students (59% of them) rely on part-time work to earn income while studying. But many universities now advise students to limit the amount of hours they spend working while studying so that there is no adverse effect on coursework.
For students who find that it is not feasible to work during term-time, they should be encouraged to work seasonally over the summer or winter holidays.
Grants, scholarships and bursaries
Unlike loans - grants, scholarships and bursaries are yours to keep (unless your child leaves his or her course early).
These options are available to students across the UK. Many are awarded for academic achievements as well as allowances for parents and students with dependents, students with disabilities and students from low-income backgrounds. To see what additional finance options may be available to your child, contact the university or institution they will be attending or see what additional government funding may be available.
Don’t forget: Grants are handled differently depending where you reside in the UK. Before you apply, you should make sure you speak to your child’s university to fully understand the particular terms and conditions that apply.
Are there additional sources of student funding available?
If you have explored all of the avenues above and you think your child is still going to experience a funding gap or if your child is ineligible for government funding, you should consider the best form of alternative borrowing options for your circumstances.
When considering any of these options, you should opt for the versions of these products that are tailored to students as these often offer more flexible terms.
Student bank account
Many student bank accounts offer overdrafts usually between £1,000 and £3,000 that remain interest-free for the duration of their degree.
Don’t forget: While an overdraft may provide a quick fix for some extra cash, it’s not a good long-term solution. The debt can quickly increase when fees kick in after your child graduates.
Student credit cards
Some banks offer student credit cards which typically offer interest rates between 18% and 20%. These are better options than non-student credit cards which typically have interest rates between 20% and 35%, but the debt can still add up quickly.
It’s important that your child understands that this isn’t ‘free money’ and there are serious implications for making late payments including extra fees and an impact on their credit score and credit history. Credit cards should also not be used for longer term borrowing needs and it is likely your child will have a limit on the amount they can put on the card (for example a £500 credit limit).
Private loans for students
Private loans for students are a lesser-known way of financing university costs. Moreover, many parents hesitate to point their child in this direction as they may associate these loans with less reputable payday loans.
These loans are tailored and designed for higher education expenses and can therefore have several advantages. For example, they do not require a minimum income, employment history or established credit history for students to qualify.
Where can your child turn for a private student loan?
There are a few companies that offer private loans tailored to students and you should research those that can support you. Future Finance provide private student loans from £2,000 with interest rates starting from 8% (variable) and a representative example of 22.8 % APR (variable). Due to the higher education focus of these loans, they have many student-specific benefits. They also encourage responsible borrowing by paying tuition fees directly to universities across the UK, ensuring the funding goes towards their education.
In some cases, a guarantor may be required (see our section on what it means to be a guarantor further in this guide). We encourage all students to seek government- funded loans first and we are here when these options are unavailable or simply not enough to cover all the costs of university.
We aim to support you and your child every step of the way, which is why our private loans are flexible and tailored to student needs:
Trusted by students
We’re ranked as Excellent (based on 675 reviews as of January 2020) on Trustpilot by our student customers based on our customer service and flexibility provided to students for repayment options.
Endorsed by student bodies
Future Finance collaborates with these partners as well charities such as The Money Charity to deliver our financial literacy resource, Student Money, which helps prepare students for the realities of student life and make sense of money management and financial jargon. It also provides tools for effective budgeting and saving.
Your child can apply up to six months before the first date of a course and at any time during their studies.
This gives your child the flexibility to acquire some extra support at any point during his or her time at university should he or she need it. It also allows students to apply ahead of their course start date to see if they would be eligible for a loan with Future Finance.
The loan can be finalised at the time of application (with funds coming through when the course begins). But applying early gives you the piece of mind that finance support is there should your child need it.
Future Finance requires repayments during term time (to get your child used to making monthly repayments) but depending on the loan amount, these can be as low as £5 per month.
Full monthly repayments are not expected until three months on their loan after graduation giving students the time they need to start their career.
An added benefit of the reduced in-study repayments is that they also support students to develop a credit history while not in full-time employment and can also support their future borrowing needs.
Flexible loan periods
Loan periods up to 10 years in length are available; we do this to keep monthly repayments as manageable as possible during and after university. Having said this, we do accept early repayments on loans and there are no fees or penalties for paying back early.
We know interest rates can be confusing, but the total amount to be repaid and the amount of interest accrued (which is outlined to the student in their loan agreement when they apply) is based on the longest possible loan period available to them (usually 7- 10 years). The interest rate and amount to be paid back can be reduced significantly by repaying early or paying back larger sums in monthly repayments if they can do so.
Students are able to pause repayments for up to six months once making full repayments after their graduation (two separate periods of up to three months at a time).
Keep in mind that interest still accrues during such a break period. But, based on student feedback, we know that ‘life happens’ and that it is important to give them the option to take a break from repayments in the event that they need to.
Acting as a guarantor
Please note that, as a parent, you may be asked to act as guarantor. Simply put: a guarantor is a parent, friend, sibling or close relative that agrees to take legal responsibility for any debt that incurs as a result of loan defaults.
For friends and family, this is a great way to help students fund their education without having to provide finance themselves.
In order to qualify as a guarantor, all we ask is that you:
- Are 25 to 70 years of age
- Are a UK resident (or have an indefinite leave to remain Visa)
- Have a minimum of 12 months income history
- Agree to a credit check
- Meet the income and credit history criteria specific to the individual loan application
- We do not require guarantors to be homeowners.
Upon being nominated as a guarantor, we will look for the following information from you:
- Your date of birth
- Your address
- Your home phone number
- Employment and debt details
- A certified copy of your passport
- Proof of income
- Consent for us to run a credit check and employment verification
We also ask that you disclose whether or not you are acting as a guarantor for any other loans. If you would like to find out more about what it means to be a Guarantor please contact us on 020 3743 8700 or by email at email@example.com.
Due to Future Finance’s ethos of responsible lending, tuition payments are paid directly to universities and higher education establishments.
We know the student landscape in the UK is a challenging area for students who are often entering the world of money management for the very first time. That’s why, we want you to have all the information necessary to understand the choices available.
We also understand that students may not have much experience dealing with borrowing money and credit and so we’re dedicated to providing support throughout the loan process with transparent information and on-hand customer service. Remember, we’ll only lend when we are confident that the student has the ability and means to maintain an affordable repayment schedule.
We recommend your child visit Student Money, an independent website powered by Future Finance and our many partners in the student space to provide impartial advice and information on money management
If you have questions about finance options for students in the UK, please get in touch with your university for more information. And if you have any queries about how Future Finance may be able to support your child or a student you know, please don’t hesitate to get in touch with us directly.
Future Finance Student Loan Representative Example 22.8% APR (variable)
Download this Parent’s Guide as a PDF here.
- 1 Future Finance Online Survey, July 2019, 1,930 students surveyed.
- 2 Future Finance Online Survey, July 2019, 1,930 students surveyed.