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Borrowing money as a student

Debt can feel like a negative thing, but it’s important to remember that not all debt is bad.

For many people, it’s a part of everyday life and debt is only a problem when it becomes too much to manage.

If you’re a student, you may be looking at borrowing money to cover your tuition fees and living expenses. Here are some possible lending options to help you as a student.

How to borrow money as a student

Student loans

During your time at university, you’ll have 2 main costs to cover – tuition fees and living expenses. A student loan may be available to help with both.

Tuition fees are usually paid directly to your course provider. These can often be much less if you’re on a placement year, or if you're studying abroad. 

A maintenance loan can help with living costs such as rent, food and transport. It's usually paid directly to you to manage.

If you’ve opened a student bank account, you can have your student maintenance loan paid into this. The amount you can get depends on your household income and where you’re studying.

Check if you’re eligible to apply for a student loan.

Explore: How to prepare for university

Postgraduate loans

If you want to study a Postgraduate Master’s Degree, there are different ways you can fund this:

  • bursaries and grants
  • a studentship
  • with a loan
  • funding from your employer

If you’re taking out a Postgraduate Master’s Loan to help with course fees and living costs, the amount you get will depend on when your course starts. The same applies to a Postgraduate Doctoral Loan.

Visit GOV.UK: Funding for postgraduate study for more information, including eligibility criteria.

When do you start repaying your student loan?

You’ll be expected to pay back your student loan after you’ve graduated and your income is over a certain amount. Keep in mind:

  • repayments will automatically be taken from your salary
  • unlike other debts, repayments will stop if you lose your job
  • the earliest you'll start repaying your student loan will be the April after you graduate
  • depending on the student loan you have and where you studied, your loan may be cancelled after a certain amount of time

You can make extra repayments or pay back your full loan early if you want to and can afford to.

When do you start paying interest on your student loan?

Interest is charged from the day you start receiving the loan until it’s repaid in full, or cancelled.

While you’re studying, the interest rate is based on the UK retail price index (RPI) plus up to 3% depending on your income. 

The interest rate may change depending on when you started your course. Visit GOV.UK: Repaying your student loan to find out more.

Student overdrafts

Many student bank accounts may offer an interest-free arranged overdraft.

This agreement means you can spend more money than you have available in your account, up to a limit.

A student arranged overdraft limit will typically be between £1,000 and £3,000. This can vary depending on the bank and what year of study you’re in. If you’re unsure of your overdraft limit, contact your bank.

It’s important to check for any fees you might be charged if you go over your arranged overdraft limit. This is known as an unarranged overdraft.

You'll have to pay back the money in your student overdraft when you leave university. You may be given a fixed period of time to do this after graduating - your bank should be able to discuss this with you. 

If you need further advice, you may want to speak to the National Association of Student Money Advisers (NASMA) or your Students’ Union welfare team. They may be able to help.

Explore: Understanding your student overdraft

Consider a student credit card

As a student, it’s unlikely you’ll have a long history of borrowing, so you may have a low credit score. This is what lenders use to help them determine whether to give you credit.

A student credit card could help you build up your credit rating, which could stand you in good stead for any future borrowing.

If you choose to take out a credit card and spend money on it, it’s important you never miss a repayment as it may harm your credit score.

Student credit cards typically have a low credit limit to help people avoid having too much debt. But you should aim to pay off your balance in full each month. This way, you won’t have to pay interest on what you owe.

Explore: How do credit cards work?

How to get help with debt

If you need some support when it comes to your finances, there are places you can contact, such as: