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Demystifying the new UK Government Postgraduate Loans Scheme

8 April 2016

4 mins

Thinking about a masters degree but worried about the upfront costs? Fear not! A new Government-backed Postgraduate Loan Scheme has been introduced in the UK, and it’ll change everything you thought you knew about funding postgraduate study in the UK.

The UK Government Postgraduate Loans Scheme was first announced as part of the Chancellor’s 2014 Autumn Statement. The loans have been confirmed for 2018-19 and will provide a loan of up to £10,609 a year for postgraduate masters students. So if you’re looking to study an MA, MSc, MRes, MBA, Med or LLM on or after the 1st August this year, keep reading.

The key details

Which courses are eligible?

  • The loan is for masters courses in all subjects beginning on or after 1st August 2016, including taught and research programmes.
  • Your programme can be a full-time (1-2 years), part-time (2-4 years) or distance learning course. If your chosen course is only available part time, a 3 year course will be accepted. Your course must be from a UK university.
  • MA, MSc, MRes, MBA, Med or LLM courses are accepted.  MPhil programmes lasting 2 years or less are also included, but the loan will not cover PhD’s.

How much can I borrow? 

  • Full time students can borrow any amount up to £10,609, which will be issued in three instalments over the academic year. Loans for part-time study are capped at £5,000 per year, for 2 years.
  • It’s up to you how much you borrow, whether that’s £100 or £10,609. It’s also your choice how you spend the money, though the loan is intended to cover the cost of your tuition fees, learning resources and/or living expenses.
  • The loan has been designed to help individuals and is flexible enough to cater to specific needs. Some students, such as those living close to their chosen Institution, will be able to self-fund their living expenses, but may need the loan to help pay for their course. Some will be able to self-fund their course, but need a loan to help cover their living costs. Others may not be able to contribute anything towards their fees, resources or living costs.

Who can apply? 

  • To get the loan, you must be living in England and intend to study your masters at a UK University. UK nationals and those with settled status in the UK can apply, so long as they have been living in England for 3 years. EU, EEA or Swiss nationals living in the EU, EEA or Switzerland are also eligible, so long as they are intending to study at a UK University.

When do I repay the loan?

  • You are not required to repay any of the loan until you have finished or left your course and your income is over £21,000 a (frozen until 2021).
  • Once you earn over this amount, the Government will automatically take 6% of what you earn over the threshold (keep reading for an example). Any loan remaining 30 years after you’re due to start making repayments will be written off.

Will I be charged interest?

  • Interest will be charged at the Retail Price Index (RPI) plus 3% from the day you receive your first payment until the loan is paid in full.

When can I apply?

  • You can apply for a loan for 2018-19 entry from summer 2018. Further information about application dates can be found here.

An example case

Darren is 26 years old and is from Manchester. He wants to study MA Media and Creative Industries full-time from September 2016. This will be his first Masters programme, and it is going to cost him £10,150 to complete. His parents have kindly saved £3,000 towards his fees, so Darren needs a loan of £7,150 in order to pay for the rest of his course. Darren is going to move in with his sister, so won’t need any money towards living fees. However, he would like an extra £500 to get a laptop for his studies.

Darren requested £7,650 from the Student Loans Company, and was accepted. He was given the payment in 3 instalments over the duration of his course.

Darren will complete his programme in September 2017. Darren wants to work in Digital Media, which can pay between £22-£50k per annum.

If Darren’s first role had a yearly salary of £25,000, his loan repayments would look like this:

  • The UK Government’s agreed threshold: £21,000 (frozen until 2021)
  • Darren’s total earnings over the threshold: £4,000
  • 6% of earnings above the threshold: £4,000 – 6% = £240/year, or £20/month

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