The UK student finance system continues to evolve as the government adjusts funding levels, repayment rules and support available to students. Whether you’re already studying in the UK or planning to start university in 2026, it’s important to understand how student finance currently works and what has changed over recent years.
Student finance in England is generally divided into two types of support:
- Tuition Fee Loans, which cover your university tuition fees.
- Maintenance Loans, which help with living costs (accommodation, food, transport)
Most new undergraduate students continue to fall under Plan 5 student loans, which were introduced for students starting courses from 1 August 2023. While the system remains income-based and repayments only begin once you earn above the repayment threshold, Plan 5 differs from previous loan plans in several important ways.
Students repay their loans for longer
One of the biggest differences between Plan 5 and the previous Plan 2 system is the repayment period. Under Plan 2, any remaining student loan balance is written off 30 years after repayments become due. Under Plan 5, borrowers may continue making repayments for 40 years before any remaining balance is written off.
For many graduates, this means making repayments over a longer period, even if the monthly repayment amounts remain affordable.
The repayment salary threshold is lower
Under Plan 5, graduates begin repaying their student loan once their annual income exceeds £25,000. Repayments are calculated at 9% of earnings above the threshold, meaning you only repay more as your income increases.
Although this threshold is lower than under previous loan plans, repayments remain income-contingent, so graduates earning below the threshold do not make repayments.
Maintenance Loans have increased—but many students still face rising living costs
Maintenance Loan rates are reviewed each academic year and have continued to increase since Plan 5 was introduced. However, many students still find that these increases have not fully kept pace with rising accommodation, transport and everyday living costs.
As a result, many students continue to supplement their Maintenance Loan through part-time work, family support or additional savings.
Plan 5 loans have lower interest rates than Plan 2
One positive aspect of Plan 5 is the way interest is calculated. Unlike Plan 2, where borrowers could be charged Retail Prices Index (RPI) plus up to 3%, Plan 5 loans accrue interest at RPI only. This means borrowers generally pay less interest over the lifetime of the loan than they would under the previous system.
The Lifelong Learning Entitlement is being introduced
One of the biggest long-term changes to higher education funding is the Lifelong Learning Entitlement (LLE). The LLE is designed to make higher education more flexible by allowing eligible learners to access funding for individual modules, shorter courses and part-time study, rather than only traditional full degree programmes.
The rollout is expected to continue over the coming years, giving students greater flexibility to upskill or retrain throughout their careers.
Tuition fees have increased
For students starting courses in recent academic years, the maximum tuition fee charged by universities in England has increased from £9,250 to £9,535 per year. This increase is automatically covered by the Tuition Fee Loan for eligible students, meaning most students do not need to pay these fees upfront.
Why should you still consider studying at a UK university?
Although UK student finance has changed, a university degree remains one of the strongest long-term investments many people can make. Student loans in England work differently from traditional debt. Repayments are based on income rather than the total amount borrowed, and if your earnings stay below the repayment threshold, you won’t make repayments.
Graduates also continue to earn significantly more on average than non-graduates over the course of their careers, while gaining valuable qualifications, professional skills and access to wider career opportunities. Before applying, it’s worth understanding exactly how student finance works and estimating what your repayments might look like after graduation. With the right information, you can make an informed decision about your future and take full advantage of the support available. Then, the next step is to take a look at courses in the UK and start thinking about what fits your experience and goals…but no worries, we can already help out with that!
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