Student loan is designed to facilitate the students to meet their living costs while studying. It is the part of the government’s financial support package for college-goers to pursue higher education.

With higher education getting increasingly expensive, introduction of tuition fees has stiffened the requirements for student scholarship. Thus more and more students are opting for this loan in order to seek higher education.

Student loan is similar to a common loan apart from the fact that the interest paid on student loan is linked to the inflation rate. Here the borrower has to repay the exact amount that has been borrowed in real terms. The borrower’s income level decides the pace with which the loan is repaid. However, there is time relaxation offered to the borrower for the repayment of the loan. He needn’t repay the loan unless and until he starts earning at least £10000 annually; which means his monthly salary should be around £833.33.

The relaxation in repayment and the linkage of interest rate to inflation rate makes the student loan the most sensible and cheapest way to borrow money.

After the completion of your academic year, if you start earning the mentioned amount, your employer starts deducting your payments through PAYE. If you’re self-employed need to pay through the Inland Revenue’s self-assessment system.

The gross amount paid by you is worked out as 9 per cent of £10000 plus whatever you earn over £10000. For instance, if you’re paid £2000 a month, your repayment would be 9 per cent of £1166.67, which is the difference between £833.33 and £2000.
A Student loan can be applied through the local award authority. However, the eligibility criterion for the full Student loan is decided upon the additional contributions to the tuition fees.

However, not very student is eligible for a Student loan. There are certain criteria as a student you need to fulfil. In general, students can receive at least 75 per cent of he loan provided that they fulfil the basic eligibility conditions. The age of the student should be below 54 years at the start of the course. EU / Overseas students or students from the Channel Islands are not eligible for student loan. Even nursing/ health studies students in receipt of NHS non-means tested bursaries, or who are salaried NHS employees are not eligible for student loan.

The eligible students are conveyed the amount of loan granted by LEA. They are thereafter given an application form to apply to the Student Loans Company for the loan before they enrol their name for the course.

The student loan is given to you in three instalments. The first one is directly paid into your bank account after your enrolment with the course. Once you submit the evidence of your student support number to the University's Student Funding Unit, the Student Loans Company is informed and your payment is activated. The other two instalments are thereafter credited to your bank account accordingly.