Maintenance Loan Explained In December 2023

In the UK, a student loan is a key aspect of student financing. This article will delve into the intricacies of maintenance loans, their history, key features, the application process, and repayment terms. 

By reading this article, you will gain valuable insights into how these loans impact students’ finances and living costs. For both full-time and part-time students, this information is essential to managing student funding. 

Whether you’re an undergraduate student or an EU student covered under the EU Settlement Scheme, this guide aims to shed light on maintenance loans. 

It provides a roadmap for students navigating the student finance landscape. This ranges from understanding the role of the Student Loans Company, to the specifics of the student finance calculator.

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Background and Origin of Maintenance Loan

To help students with living costs while studying, maintenance loans were first introduced in 1990. Consequently, they were administered by Local Education Authorities. In 1998, the Department for Education and Skills took over this administration. 

In 2010, The Student Loans Company was then established to provide student loans centrally across the UK.

The introduction of these loans marked a significant shift in how education was funded in the UK. Previously, tuition fees were covered by grants, with students receiving a maintenance grant for living costs. 

However, the system evolved to include loans, a change which revolutionised student funding. 

Maintenance loans were designed to cover living costs, such as accommodation, food, and books. This complements the tuition fee loan, which alternatively covers the cost of the course. Together, these loans constitute the standard student loan package in the UK.

Key Features of Maintenance Loan

Maintenance loans have several key features that distinguish them from other forms of student finance.

First, the amount which you can borrow is determined by your household income. A higher household income will result in a lower loan amount and vice versa. Consequently, more funding is accessible to those from lower income families. 

It is also important to note that maintenance loans are only available to UK students and EU nationals who have obtained settled or pre-settled status under the EU Settlement Scheme. Consequently, the majority of international students cannot access maintenance loans.

In addition, this loan is paid directly into your bank account in 3 disbursements. This means that one is paid at the start of each term.

How to Apply for a Maintenance Loan

To apply for a maintenance loan:

  1. Create an account on the student finance website for your nation. This includes Student Finance England, Student Finance Wales, Student Finance Northern Ireland or SAAS (Scotland).
  2. Next, fill in the online application details including your course, university, household income and supporting documents.
  3. Remember to agree to the loan declaration, and consent to share information.
  4. Provide any additional requested evidence, such as household income, identity, and course details.
  5. If you cannot use the online system, ensure that your documents are certified.

The process is similar across the 4 nations, although each handles their own applications and maintenance loan amounts.

You can also watch this video on Youtube here.

Repayment Terms for Maintenance Loan

Repayment of maintenance loans begins after you’ve finished your course and you start earning above a certain income threshold. 

The repayment threshold varies depending on where you live in the UK. For England and Wales, you start repayments once you earn over £27,295 a year. Alternatively, it is £25,000 for Scotland, and £19,390 for Northern Island. 

The repayment amount is 9% of your income above the repayment threshold. Therefore, if you’re earning £30,000 a year, you’ll repay 9% of £2,705, which is about £20 a month. 

If you’re employed, these repayments are automatically deducted from your salary. Conversely, if you’re self-employed, you make repayments as part of your self-assessment tax return.

Impact of Maintenance Loan on Students’ Finances

It is important to recognise the substantial impact which maintenance loans have on student finances. For instance, they influence their living arrangements and overall quality of university life. 

As the loan covers living costs, this can alleviate financial stress and allow students to focus more on their studies.

However, depending on the loan amount and the cost of living in the student’s city, some students may still face financial challenges. However, particularly for those in cities with increased costs of living, this may not cover all necessary expenses. 

Finally, maintenance loans do contribute to student debt. Although this loan will be helpful in the short term, it is essential to recognise that it will need to be repaid once you start to earn above the repayment threshold. 

Furthermore, whilst maintenance loans provide crucial financial support, students should carefully consider how much they need to borrow. 

This is because taking out more than necessary will increase debt obligations after graduation. Consequently, budgeting properly and making use of other finance options can help to minimise loan amounts.

maintenance loan

Financial Support for Full-Time Students

To manage their living costs and tuition fees, full-time students often require financial support. In addition to the maintenance loan, the UK government provides other types of financial support to help students. 

The Childcare Grant is one such support, available to full-time students with dependent children. This grant covers up to 85% of childcare costs, offering significant relief to student parents.  However, it is essential to note that grant amounts are impacted by household income. 

The Parents Learning Allowance is another form of financial support for students with dependent children. This allowance aims to help cover course-related costs, making it easier for student parents to continue their education.

Furthermore, disabled students will receive specific financial support. The Disabled Students’ Allowance helps to cover extra costs that disabled students might have in relation to their studies, such as specialist equipment or a non-medical helper. 

This allowance is added to the maintenance loan, and you will not be required to repay it.

"It is important to recognise the substantial impact which maintenance loans have on student finances. For instance, they influence their living arrangements and overall quality of university life."

Comparing Undergraduate and International Student Loans

Although UK undergraduate students can access a range of loans and grants, international students’ options are more limited. However, depending on circumstances, some financial support is available.

Whilst international students from the EU who are covered under the EU Settlement Scheme can apply for a maintenance loan, international students are primarily self-funded. Consequently, students often rely on personal funds, scholarships, or loans from their home country.

It is important to note that despite being international students, Irish citizens enjoy the same student finance rights as UK students. 

This is because the Common Travel Area agreement between the UK and Ireland allows Irish students to access maintenance loans and other financial support.

Understanding Maintenance Loans

Understanding Loan Repayments

After graduation, understanding loan repayments is essential for managing finances effectively.  Rather than being determined by how much you owe, student loan repayments are based on your income. 

Once you’re earning above a certain income threshold, repayment for maintenance loans and tuition fees will begin. In Northern Ireland, the threshold is £19,390 for plan 1 and £27,295 for plan 2.

Your employer will take repayments directly from your salary, similar to tax and National Insurance. If you’re self-employed, you’ll make repayments as part of your self-assessment tax return.

If moving abroad for more than three months, it is necessary to inform the Student Loans Company. This is because you may be required to make overseas payments. As the rules for this can be complex, it’s essential to get advice if this applies to you.

It is also key to note that interest is charged annually on student loans, whilst studying and until repaid. Although partial early repayment is allowed, this is limited annually. After 30 years, any outstanding loan balance is written off.

Support for Part-Time Students

Part-time students, like their full-time counterparts, also have access to financial support in the form of maintenance loans. The loan amount is typically determined by the intensity of the course, the course fees, and the student’s household income. 

If you have a disability, Part-Time students could also be eligible for the Disabled Students Allowance. This allowance can help to cover additional costs related to their studies, such as purchasing specialist equipment or hiring a non-medical helper.

For part-time students who are parents, the Childcare Grant and Parents Learning Allowance can be valuable forms of financial support. These grants offer support in covering potential childcare and course-related expenses. 

NHS Learning Support Fund and Bursaries

For healthcare students in England, the NHS Learning Support Fund is a financial support scheme. 

This fund can provide additional support on top of the standard student finance package, particularly for students on nursing, midwifery, and several allied health professional pre-registration courses.

The fund includes a Training Grant, which is a £5,000 annual payment for eligible students. This grant is in addition to the standard maintenance loan, and does not require repayment. 

The NHS also provides several bursaries, such as the Nursing Bursary and the Social Work Bursary. These bursaries can provide financial support to students on particular courses, helping them to manage their living costs and course fees.

Lastly, for students who may be eligible for income-related benefits, the Special Support Grant is available. Although this grant is equivalent to the Maintenance Gran, it does not reduce the amount of Maintenance Loan which you can receive.

Application Process and Timeline

A Case Study On Navigating Maintenance Loan as a Part-Time Student

To bring the concept of a maintenance loan to life, let’s consider a real-world example. This case study will focus on a part-time student, namely Sam, a single parent from Northern Ireland, who is also a UK student.

Sam, an Irish citizen living in Northern Ireland, decided to pursue a degree part-time while raising her child. To help cover her living costs, Sam was eligible for a maintenance loan from Student Finance Northern Ireland as a part-time student. 

The loan amount was determined by her course intensity, the course fees, and her household income.

Despite being a part-time student, Sam was also eligible for the Disabled Students’ Allowance as she had a disability. This allowance helped her cover additional costs related to her studies, including the cost of specialist equipment.

To support her children’s needs during her studies, Sam was also eligible for the Childcare Grant. This grant, alongside the Parents Learning Allowance, provided crucial financial support. Consequently, she was able to balance her studies and parenting responsibilities.

Upon graduating, Sam found employment and started earning above the repayment threshold. This triggered the start of her student loan repayments, which were consequently deducted from her salary by her employer.

Sam’s story exemplifies how the maintenance loan and other financial support can help students, particularly part-time students and single parents, to navigate higher education.  

Grants and allowances provide support with financial challenges, as well as helping to manage personal responsibilities alongside studying.

Key Takeaways and Learnings

Before we wrap up, let’s summarise the article by highlighting the important aspects about maintenance loans. Whether you’re a full-time student or a part-time student, this will help you to remember the key points and understand the actions you should take.

– Maintenance loans are a crucial aspect of the student finance package in the UK, designed to help cover living costs while you study.

– The amount which you can borrow through a maintenance loan is determined by your household income, with lower-income households eligible for more funding.

– Application for a maintenance loan is a straightforward process, typically applying through the Student Finance England website or equivalent bodies in Scotland, Wales, and Northern Ireland.

– After finishing your course and beginning to earn above a certain income threshold, you will be required to repay your maintenance loan. 

– Maintenance loans can significantly impact student finances, influencing living arrangements and quality of life during studies.

– In addition to the maintenance loan, full-time students can access other forms of financial support, such as the Disabled Students’ Allowance and the Parents Learning Allowance.

– Depending on their circumstances, part-time students are also eligible for a maintenance loan and other forms of support, such as the Disabled Students’ Allowance.

– The NHS Learning Support Fund provides additional support for healthcare students, offering bursaries for specific courses.

– It’s crucial to understand your student loan repayments, which are based on your income, rather than how much you borrowed.

– Finally, remember that although a maintenance loan can be a useful financial support during your studies, it does contribute to your student debt. Consequently, it needs to be repaid once you start earning above the repayment threshold.

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Meet the author

Jane Parkinson

Jane Parkinson

Jane is one of our primary content writers and specialises in elder care. She has a degree in English language and literature from Manchester University and has been writing and reviewing products for a number of years.

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