Student loans and grants in the United Kingdom are financial instruments offered to students to fund their study. The loans in use today are income contingent, meaning that the repayment amounts vary depending on the income of the borrower. They are also written off after a set period, depending on the type of loan.
Student loans were introduced in 1990, and a single system was in effect across the entire country until 2012. Tuition fees were greatly increased that year amid public opposition to the decision, and the loan system has seen repeated attempts at reform since. These reforms were not always applied in the devolved regions, which has stratified the system and adding significant complexity. There are currently five different student loan "plans" available for students studying today, depending on location and the type of course, with a large variation in cost, terms, and structure. In general, the newer systems are less generous than the older systems.
Loans are primarily provided by the government through the Student Loans Company (SLC) in England and Wales, and the organisation is partnered with Student Finance NI and the Student Awards Agency for Scotland, which cover those areas. Most undergraduate university students resident in the United Kingdom are eligible for student loans, and some students on teacher training courses may also apply for loans. Student loans also became available from the 2016–2017 academic year to postgraduate students who study a taught master's, research or doctoral course.
History
Free higher education (before 1998) In the years following World War II, most local education authorities (LEAs) paid students' tuition fees and also provided a maintenance grant to help with living costs; this did not have to be repaid. The Education Act 1962 made it a legal obligation for all LEAs to give full-time university students a maintenance grant. The maintenance grant depended on parental income, but a minimum grant (initially £50) was paid. Recipients of the minimum grant did not have their fees paid. There was no legal obligation on parents to make this up to the full grant. In 1965, the full grant was £370 for the Universities of London, Oxford and Cambridge, and £340 elsewhere. By 1981, the grant had increased to £1,535 a year (£1,825 for London) and the minimum grant was £410. About 155,000 students were paid the full grant in 1980–1981. Those whose parents had low income would receive the full maintenance grant.
The first student loans were introduced by the Conservative government in 1990; these were intended to provide support towards living costs, as tuition was still free. To this end, the SLC (Student Loans Company) was founded for the 1990–1991 academic year. In its first year, the SLC gave loans to 180,200 students. This represented a take up rate of 28% of eligible students, with an average loan of £390.
Early tuition fee system (1998–2011) In 1997, a report by Sir Ron Dearing recommended that students should contribute to the costs of university education. The Labour government under Tony Blair passed the Teaching and Higher Education Act 1998, which introduced tuition fees of £1,000 per academic year to start in the 1998–1999 academic year. The move took place amid a desire to marketise academia and research more broadly, in an initiative put forward by Peter Mandelson. In addition, maintenance grants were replaced with repayable student loans for all but the poorest students. The total loans provided by the SLC increased from £941 million in the 1997–1998 academic year, to £1.23 billion in the next year, when tuition fees took effect. In January 2000, the Scottish government, which consisted of a coalition between Labour and the Liberal Democrats, decided to replace annual tuition fees for Scottish students studying at Scottish universities with a £2,000 charge after graduation. This charge was abolished in 2008.Bolton, Paul, "Tuition Fee Statistics", UK House of Commons Library Section Social and General Statistics, Standard Note SN/SG/917 dated 23 November 2010 In a similar vein, the Welsh government gives Welsh students studying at Welsh universities a tuition fee grant.
The Higher Education Act 2004 increased tuition fees from £1,000 to a maximum of £3,000. By the 2005–2006 academic year, the SLC was providing £2.79 billion in loans to 1,080,000 students. Those starting university in 2006 were the first to pay £3,000 a year rather than £1,000.
Stratification and increased cost (2012–present)
A major reform of university financing took place under the Conservative-Liberal Democrat coalition in 2012. This involved the controversial trebling of tuition fees to £9,000 per year, and a new loan system titled "Plan 2". The reforms were widely unpopular and were not rolled out in all four countries of the UK. Repeated attempts at changing the system and only partial adoption in the devolved regions resulted in increased stratification of the student loans system. These changes included controversial measures such as freezing repayment thresholds, which required retroactively amending the terms of loans already taken out by students. This kind of action would be illegal for conventional loans.
The student loans system also struggled with overseas repayment from the 2010s, as there was no automatic mechanism to receive payments from borrowers who left the country after completing their studies. The SLC lost contact with hundreds of thousands of people who collectively held around half a billion pounds of debt. The SLC attempted legal action against overseas borrowers, but only recovered funds from a total of six people and abandoned the process after 2017.
In 2016, the government expanded the loan system to include postgraduate study. The changes also discontinued the system of grants and bursaries, which previously offered non-repayable support to students from low income backgrounds. These alterations had the effect of making university more expensive for poorer students, and did not affect wealthier students.
In 2023, the Sunak ministry introduced "Plan 5", loans that became the main system in use for England. The system was deeply criticised, as changes to the repayment thresholds and interest rates mean that poor students will pay more and wealthier will pay less. A student who earns £37,000 in their career will pay more towards their student loan than a student who earns £70,000. A senior partner from The London Economic described the system as "deeply regressive" and suggested it was demographically targeted to subsidise white male students over their peers.
From 2023, five distinct student loans systems have been in place nationwide, with wildly different costs, terms and duration. The choice of which plan to use is not available to the student; rather it is dependent on the type of course and the location of the university. A public inquiry was launched in 2026 by MPs over allegations that the student loan system was confusing and unfair. The chancellor Rachel Reeves described the system as "broken".
Eligibility The eligibility requirements vary by loan type, but in general the course must be from a verified higher education institution, and the students must be resident in the UK.
Tuition fee loan All full-time students are entitled to a loan covering the full tuition fee. The maximum tuition fee loan has accordingly risen to match the value of tuition fees. Those have variously risen from their introduction by either inflation or by legislation. Since 2012, the fee cap and loan system has varied in the devolved regions. Northern Ireland retained the "Plan 1" student loan system, which is a lower cost and has lower interest. Scottish-domiciled students studying in Scotland are entitled to free tuition. Students may not choose which Plan they are placed on; this is instead defined by the type of course and location of the university. The exception to this is the takaful option, which can be selected instead of a Plan 5 loan when applying for student finance (an equal-cost option intended for Islamic students)
Since 2016, tuition fee loans have been available for postgraduate study. In addition to the usual requirements, the student must be under 60. This was expanded to include doctoral study from 2018–2019. For 2026–2027, the cap is set at £13,206 for master's, and £31,122 for doctorates.
Maintenance loan All eligible UK-domiciled students are also entitled to a maintenance loan, which is designed to help pay for living costs whilst at university. The maximum maintenance loan is adjusted for students depending on if they live at home, are studying in London, or come from low income households. The London adjustment is intended to reflect the higher cost of living in the city. The precise threshold for qualifying as a low-income household varies depending on which country of the UK the student resides in, and is set between two bands, with very poor students receiving the full extra money and less-poor students receiving only a partial amount. For the 2025–2026 academic year, the maintenance loan was set at £8,877 for students living at home and £10,544 for students living elsewhere. In London, the cap is raised to £13,762.
Disabled Students Allowance
DSA offers support for costs arising from a student's disability. This includes specialist equipment, travel, and a computer. DSA does not need to be paid back.
Grants and bursaries (abolished) A variety of supporting grants were available before the mid 2010s, largely to support students from low income backgrounds. Unlike student loans, the grants did not need to be repaid. They were abolished by David Cameron's Conservative government at the time, on grounds of cost. The Starmer ministry indicated that it planned to reintroduce the grants; it, however, did not do so.
Bursaries were available from universities worth a minimum of 10% of the tuition fee in receipt of a full maintenance grant. The legal requirement for universities to offer these was removed when Plan 2 loans were introduced in 2012.
Maintenance Grants were awarded to all students until the 1990s to help with the cost of living. These were frozen in 1989 and eventually restricted to students from low-income households in 1998, alongside increased loans. The precise threshold for qualifying as a low-income household varied depending on which county of the UK the student resides in, and was set between two bands, with very poor students receiving the full grant and less-poor students receiving only a partial grant. For the 2009–2010 academic year, students from England and Wales were entitled to a grant of up to £2,906; students from Scotland £2,105; and students from Northern Ireland £3,406. The grants were abolished for new students in 2016, but existing students could continue claiming for the remainder of their courses. A "Special Support Grant" was also available for students on benefits, but this too was scrapped in 2016.
Loan plans Since they were introduced in 1990, various loan categories have been made available. These vary depending on when the course was first started, and in which region study was conducted. Only the 1990s mortgage style loans have been retired; all other plans are currently available in some area.
Income-contingent loan repayments are usually made via the tax system. For employed borrowers in the PAYE system, this means the repayments can vary even from week to week. If this results in the total repayments for a tax year being more than the required annual amount, the excess may be reimbursed on request. Outstanding income-contingent loans are written off if the borrower dies, through disability becomes permanently unfit for work, or after a set period. The write-off periods have been changed several times, and are listed along with the terms for each loan plan below.
Mortgage style loans (1990–1998)