Is It Worth Getting a Student Loan in the UK? What You Need to Know Before You Decide
Published 23rd of October 2012·Updated 19 April 2026
Reviewed by: Reviewed for accuracy April 2026
For most UK students, taking out a student loan is worth it. The loan covers tuition fees and contributes to living costs, repayments only start when you earn above a set threshold, and any remaining balance is written off after a set period. You will not be chased for the debt and it does not appear on your credit file in the way that commercial debt does.
Short Summary
A student loan from Student Finance England is not like a bank loan. You only repay a percentage of income above the repayment threshold - you never face a fixed monthly bill regardless of what you earn.
For Plan 5 borrowers (those starting university from September 2023 onwards), repayments are 9 per cent of income above £25,000 per year. If you earn less than £25,000, you pay nothing that month.
The loan is written off 40 years after you become eligible to repay. Many graduates - particularly those in lower or average-earning careers - will never repay the full amount.
The interest rate on student loans is linked to RPI (Retail Price Index) inflation. Check the current rate on the Student Loans Company website, as it changes annually.
How does a UK student loan actually work?
Student Finance England pays tuition fees directly to your university and pays a maintenance loan into your bank account each term to help cover living costs. You do not see the tuition fee money; it goes straight to the university on your behalf. The maintenance loan amount depends on your household income and where you study.
Repayments start automatically through the PAYE payroll system once you earn above the repayment threshold for your loan plan. You do not set up a payment; it is deducted from your wage in the same way as income tax and National Insurance.
What are the current tuition fees and loan amounts?
As of 2025/26, English universities can charge up to £9,535 per year in tuition fees, a figure set by the government. This applies to most undergraduate courses at publicly funded universities. The total you borrow across a three-year degree can exceed £28,000 in fees alone, before maintenance loans are added.
Maintenance loans for 2025/26 range from approximately £4,651 to £13,022 per year, depending on household income and whether you live at home, away from home outside London, or away from home in London. These figures are updated annually by the government.
| Situation | Max maintenance loan 2025/26 (approx.) |
|---|---|
| Living at home | £4,651 |
| Living away from home (outside London) | £9,978 |
| Living away from home (in London) | £13,022 |
When do repayments start and how much are they?
For Plan 5 borrowers (starting university from September 2023), repayments begin the April after graduation or leaving university, once earnings exceed £25,000 per year. The repayment rate is 9 per cent of income above that threshold. On a salary of £30,000, you repay 9 per cent of £5,000 - which is £450 per year, or £37.50 per month.
Repayments stop automatically if your income drops below the threshold - for example, during a career break or period of low earnings. This makes student loan debt significantly less risky than commercial debt.
Does a student loan affect your credit score?
No. A student loan from the Student Loans Company does not appear on your Experian, Equifax or TransUnion credit file. Lenders cannot see your student loan balance when assessing mortgage or credit applications. However, your monthly repayment does affect your take-home pay, which mortgage lenders will consider when calculating affordability.
Is it better to pay off a student loan early?
For most people, no. Early repayment of a student loan only makes financial sense if you expect to repay the full balance before it is written off. If you are unlikely to repay the full amount - which is true for many graduates - then every pound you put towards early repayment is money spent on debt that would otherwise have been cancelled. Paying down higher-interest commercial debt, building an emergency fund or investing in a pension typically gives better financial outcomes than voluntary student loan overpayments.
If you are a high earner on course to repay the full balance well before the write-off date, the calculation changes. A financial adviser can help you model your specific situation.
Is university still worth it financially?
The evidence suggests yes for most graduates, but it varies by subject and career. The Institute for Fiscal Studies (IFS) has found that the average graduate earns substantially more over their lifetime than non-graduates, even after accounting for student loan repayments. However, the premium is much higher in some subjects (medicine, law, engineering) than others. Research graduate salary data for your intended field before making a decision based on financial return alone.
University also provides skills, networks and experiences that do not translate directly into income figures.
Frequently Asked Questions
What happens to my student loan if I never earn enough to repay it?
For Plan 5 borrowers, the loan is written off 40 years after you first became eligible to repay. If your income stays below the £25,000 threshold throughout your working life, you will make no repayments and the debt is simply cancelled. The loan never affects your credit file and cannot be collected against your assets.
Can I get a student loan if my parents earn a lot?
Yes. Every eligible UK student can borrow the full tuition fee loan regardless of household income. The maintenance loan is means-tested - higher household income means a smaller maintenance loan. Parents are not legally required to make up the shortfall, though many do. If your parental contribution does not materialise, you may need to supplement income through part-time work or savings.
Does taking a student loan affect a future mortgage application?
Not directly. Your student loan does not appear on your credit file. However, your net take-home pay is lower because of student loan deductions, and mortgage lenders assess affordability based on net income. This can reduce the amount they are willing to lend. The effect is less significant than it sounds for most applicants, but it is worth factoring in.
What if I drop out of university?
You repay only what you borrowed. If you drop out after one term, you owe fees for that one term plus any maintenance loan drawn down. Repayments still only start once you earn above the threshold. Contact Student Finance England promptly if you withdraw, as continued payments to your university may stop immediately.
Can international students get a student loan in the UK?
Student loans from Student Finance England are available to UK nationals, settled residents and certain categories of EU citizens who meet UK residency criteria. International students from outside these categories are not eligible for government-backed student loans and must pay tuition fees upfront, typically at a higher international fee rate.