Guide to student loans

Baked potato and beansCongratulations! Your daughter or son is off to 'uni', as she or he will invariably refer to it, and a new phase of parenting is about to begin. But out of sight (and your house) doesn't mean out of your bank account.

Far from it, in fact, since part of the deal for most parents is that you make a contribution to your child's living expenses while they're studying.

So before you start forking out, you need to know how to access the student loans, grants and bursaries your child is entitled to, using our guide to student finance.

Student loans and grants

There are three main sources of financial support available: student loans and grants (both of which come from central government) and bursaries (which come from universities and colleges). Here's how they work:

  • Loans: have to be repaid after your child has finished their course, got a job and is earning over a certain amount. They will also have to pay interest on the loan, which obviously fluctuates. From September 2012 onwards, graduates earning over £21,000 will pay up to 3% interest plus the rate of inflation.
  • There are two types of student loan - the tuition fee loan, which covers the academic fees paid direct to the university or college, and the maintenance loan which helps towards student's living costs, eg for accommodation. 
  • Maintenance grants: these are available, on a sliding scale, to students in families whose household income is £42,620 or less a year. A Special Support Grant may also be available to people who qualify for Income Support or Housing Benefit.
  • Bursaries: some colleges offer non-repayable bursaries to students. Make sure your teen asks if there are any academic bursaries or scholarships available for the course they want to study.
  • NHS courses, eg for nursing, are government funded. 

How to apply for student finance

"Keep a record of everything, send any documents by Special Delivery if you can afford to, keep track of the application and if you don't understand what the online info says, call them. Take the names of the people you speak to, and the date and time of your conversation. Try to get it finalised before August because things will get frantic then. That may mean you being very vigilant." monkeysavingexpertdomcom

Your son or daughter will need to contact Student Finance England, Student Awards Agency for Scotland, Student Finance Wales or Student Finance in Northern Ireland, depending on where you live.

They will then be asked to fill in an online application for whichever sort of support they're requesting - and to provide documentary evidence, by post, of the claim they're making.

Be on hand to help if your teen is floundering, and be prepared for it to be a test of everybody's time and patience. 


As a student, your child won't have a lot of money, but it's important to encourage him or her to try to make ends meet with whatever they do have and to live within their means. (Incidentally, it's amusing to witness the switch from pre-student moaning about there being nothing in the house to eat to the paroxysms of delight about the contents of your fridge when they come home during holidays.) 

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Income for students consists of their loan and (if applicable) grant money, plus any other income they earn, eg from a part-time job in term time or a holiday job during vacations.

Encourage your student offspring to start working in their holidays, at least, to save for 'extras' such as holidays - this is an opportunity for them to start thinking about money as adults have to think about it, and to work out how to balance their budget.

Encourage them not to splurge their loan when it first becomes available, but to manage it carefully throughout the term (but be prepared for them to learn the hard way in the first year and to come begging).

And if you haven't already during their teen years, share your thrifty housekeeping tips on how to buy food and household items cheaply, and encourage them to shop around for bargains.

Further borrowing

If your child absolutely has to get into debt beyond borrowing from the government, encourage him or her to talk to their bank first and to search online for the best deals available.

Make sure he or she realises what the cheapest ways of borrowing money are - ie a bank loan is likely to offer a much better deal than a credit card - and studies the small print before they take out a loan. 

It's a far cry from the days of arguing over pocket money, but if your child finishes college or university able to budget and manage their money confidently, then at least they'll have learnt something while they're there.


Disclaimer: Any content in our family money section is intended as general information only. For specific advice about your personal financial situation, get advice from qualified, independent, regulated professionals.

Last updated: almost 2 years ago