How Student Financing Works in the UK

Before the system was changed in the 1990s, undergraduates were much better-off.  Not only were their tuition fees paid automatically by their local education authority but they also received a means-tested grant to cover their living expenses which didn’t have to be repaid. 

Nowadays, undergraduates apply for a student funding package from the Student Loans Company for their country as soon as they’ve received a confirmed place at a university.  The provision varies in different parts of the UK (England, Wales, Scotland or Northern Ireland), but students will receive funding from the Loan Company where they reside, irrespective of which part of the UK they study.

Student funding consists of two parts.  The first part is their loan for tuition fees.  This is received by all students no matter their household income and is paid directly to their university.  The UK government has set the threshold for tuition fees at a maximum of £9,250 for UK/EU students.  The initial idea was that universities would set their tuition fees according to the reputation of the degree course, and how the university stood in the rankings.  However, what has happened in practice is that all UK universities charge the maximum amount irrespective of how prestigious the university is.  As a result of this, the UK government has undertaken to re-evaluate the system to make it fairer for students. 

The second part of student funding is a maintenance loan.  These student loans are paid every term in 3 equal instalments and are for students to pay their living expenses such as accommodation, food, etc.  This part of the funding package is means-tested according to a  student’s household income.  The amount they receive also depends on whether they’ll be living at home and/or whether they’ll be studying at a university inside or outside London.  The most that undergraduates can receive in England is £8,700 a year.  For those awarded partial funding, their parents are expected to make up the shortfall with a financial contribution.   

The main complaint that students have is that this maintenance loan is insufficient to meet their needs especially considering the rising cost of living and high rents in most English cities.  According to research carried out by the Students’ Union in 2018, 61% of undergraduates said that the funding was insufficient while 1 in 3 said that their parents couldn’t – or wouldn’t – make a contribution to their living expenses, making their situation even worse. 

Because of the problems in getting by, many undergraduates take on a job to help them survive.  Most mainstream banks offer students a free overdraft facility up to a certain limit while other undergraduates use a credit card to help them through financial problems.  Cashfloat is also able to offer them money on demand with a convenient online application.  This loan is often sufficient to see them through their difficulties until they receive the next instalment of their maintenance loan.