Loans

What do I need to consider before taking out a loan?

It is important to check whether the loan company offering you a loan is authorised by the Financial Conduct Authority (FCA) so you can protect yourself from fraud or other unauthorised activity. The FCA website which explains how you can do this and where you can check the register of authorised firms.

You should also make sure you fully understand the terms and conditions of any loan or credit that you take. Before you decide to take out a loan first check:

  • how much you need to borrow
  • how much your monthly repayments will be
  • what the interest rate is and whether this is fixed or variable
  • the length of the loan agreement
  • the frequency and timing of payments
  • how you will repay the loan from your future earnings
  • at what point in your studies to take the loan – this will depend on your own circumstances; some students may need the money earlier in their studies, while others may need it later
  • what happens if you take longer to complete your studies than originally planned
  • whether you can reduce the amount you need to borrow by exploring other sources of funding or reducing your spending
  • How much in total you will end up repaying

Contact a Welfare Adviser in the Advice and Counselling Service if you would like some help thinking through these issues before you make a decision about taking out a loan.

UK Government Postgraduate Loans 

A new system of postgraduate loans for Masters degrees in the UK was introduced for courses starting from the 2016-17 academic year onwards. These are intended as a contribution towards the cost of study, so eligible students can use them as they wish to (e.g. for tuition fees, or living costs, or other costs).

You must be aged under 60 on 1st August of the year in which you start the course

Which courses can I get a Postgraduate Loan for?

Postgraduate Loans are available for study at any UK university with degree awarding powers, or an alternative funding provider with degree awarding powers.

Postgraduate Loans are available for both taught Masters programmes as well as Masters by Research, and across all subject areas. They are also available for designated distance learning courses, provided you are living in England.

Students are not eligible for a Postgraduate Loan where they are eligible to apply for a healthcare bursary or are in receipt of a social work bursary from any of the following:

  • National Health Service (NHS)
  • Department of Health, Social Services and Public Safety (DHSSPS)
  • Student Awards Agency Scotland (SAAS)

A full-time course must be a maximum of 2 years long, and a part-time course must be either:

- a 1 year full-time equivalent course studied part-time over 2 years, or

- a 2 year full-time equivalent course studied part-time over 3 or 4 years, or

- 3 year part-time course which does not have a full-time equivalent

How much can I borrow?

Eligible students can borrow up to a maximum of £10,280 for students starting in 2017-18, or £10,000 for the course for students starting in 2016-17. If the course is longer than one year, the total loan amount will be split across the number of years of the course, for example on a two year course starting in 2016 you would get up to £5000 in each year.

If you initially choose to borrow less than you are entitled to, but later decide that you need to borrow more, you can ask SFE to amend the loan amount. You need to complete a ‘loan request form’ which you can download (you cannot make this request online). The deadline for doing this is the end of May in the first academic year if your course is one year long, or by the end of May in the second academic year if your course is more than one year long.

What is the interest rate on the postgraduate loans?

Interest is charged from the date you receive your first loan payment. The interest rate is the current RPI (Retail Prices Index) percentage rate, plus an additional 3%. This means that from 1 September 2016 until 31 August 2017 the interest rate will be 4.6%.

How is the Postgraduate Loan paid?

Payment will be released once your university has confirmed to SFE that you are studying. The Postgraduate Loan will be paid from the Student Loans Company direct to you in three equal instalments across the academic year as follows:

Payment 1 – Once you have enrolled on your course (normally in September)

Payment 2 – last Wednesday of January

Payment 3 – last Wednesday of April

How and when do I apply for a Postgraduate Loan?

Applications should be made online to Student Finance England. Outr understanding is that applications for 2017/18 will open in June 2017. Apply as soon as you can to try and ensure that your loan is available at the start of the academic year. 

You must apply no later than the end of May in your first year if your course is one year long, or by the end of May in your second year if your course is more than one year long.

The application deadline may be extended if you were not eligible for the Postgraduate Loan at the start of the academic year but only became eligible part way through.

What documents will I need to provide?

This is explained on the gov.uk website.

Do I need a National Insurance Number (NINO) to apply for a Postgraduate Loan?

No payments will be released until a valid National Insurance Number (NINO) has been received and verified, unless you are a non-UK EU student. If you have already had your NINO verified as part of an earlier SFE application, the NINO does not need to be verified again.

What if something changes after I have applied?

If any personal information changes after you submit your application, such as a change of address or bank account details, you can update this information via your online account.

If other changes happen, for example you decide to enrol at a different university or on a different course, you cannot change this online, and you need to download and send in a ‘change of circumstances form’.

I already hold a Masters or higher level qualification – can I get a Postgraduate Loan?

If you already hold a Masters degree or higher level qualification (regardless of how it was funded or whether or not it was achieved in the UK) you won’t normally be eligible for a Postgraduate Loan.

I started a previous Masters but did not complete it – can I get a Postgraduate Loan?

Eligibility for Postgraduate Loan Master’s is not affected by previous postgraduate study if you did not achieve the qualification and did not receive a loan. However, in order to receive Postgraduate Loan you must undertake a full master’s degree course and not a partial course topping up from previous study or experience.

If you undertook a previous postgraduate Master’s degree and received a Postgraduate Loan or any other loan provided by a UK government authority for that course but did not receive the qualification, you will be ineligible for another Postgraduate Loan (even where you did not receive full payment of your loan), unless you can prove that you did not complete the course due to a compelling personal reason (CPR). Contact a Welfare Adviser if you think this applies to you. 

What is the personal eligibility criteria?

Please see the Appendix at the end of this guide for information about eligibility.

How will loan repayments work?

Loans are normally repayable from the April following course completion. However, postgraduate loans won’t be repayable until 2019, therefore if you study a one year programme in the 2016-17 academic year, you will have a year’s break before you may become liable for repayments.

You will only be liable to make repayments once you are earning at least £21,000 gross in a tax year, or the equivalent to this amount in any shorter period that you work (for example if in any week or month your earnings would equivocate to an annual income of at least £21,000). You will repay 6% of your income above £21,000.

If you will also be repaying an undergraduate loan, those are repayable at 9% of income above £21,000 a year. Therefore your combined loan repayments would total 15% of income above £21,000. The postgraduate loan repayment webpage has worked examples you may find useful to refer to.

If you are repaying from overseas, the repayment threshold will be based on the cost of living in your country of residence.

What happens if I fail to complete my Masters?

If you do not achieve your Masters qualification, or if you are awarded a lower level qualification, Postgraduate Loan funding that you have already received will not be considered an overpayment. However, further Postgraduate Loan funding will not be available for a new course unless you failed to complete the first course due to compelling personal reasons.

Where can I get more information?

https://www.gov.uk/postgraduate-loan

www.findamasters.com/funding/guides/new-uk-postgraduate-loans-scheme.aspx

New UK PhD Loans

The government has also announced a PhD loans scheme of up to £25,000. These loans are aimed at students who are not getting any Research Council Funding. The loans will be available for PhD’s starting from the 2018-19 academic year onwards.

Exact details of the PhD loans have yet to be confirmed by the government. In the meantime there is a list of FAQ’s from the information available to date on the Find a PhD website.

Professional and Career Development Loans

PCDLs are operated by the Skills Funding Agency through the Co-op bank. They can be used to help fund vocational or work-related training which enhances your job skills or boosts your career prospects but they are not available for all courses. A PCDL can help fund a standalone programme of up to two years, or the last two years of a longer programme. So you would normally not be able to take a PCDL until you are within two years of completing your programme, otherwise you would be required to make repayments while you are still studying. PCDLs are commercial bank loans that are partially government subsidised.

The Skills Funding Agency pays the interest on the loan while you are studying and for one month afterwards, after which you would pay it back in instalments with interest. Interest rates on the loans are set to be competitive with commercially available loans. PCDLs are being offered at a rate of 9.9% per annum. Here is an estimate of the repayments you would make depending on the loan amount and term, but you would need to check the exact terms with the bank:

Loan

Amount

Representative

APR

Term

Monthly

Repayment

Total payable

£300

9.9%

36 months

£9.63

£346.49

£5000

9.9%

36 months

£160.43

£5775.43

£10000

9.9%

60 months

£210.39

£12623.58

It is advisable to apply in good time – ideally three months before the start of the course - as it can take the bank some weeks to process your application.

As well as the type of academic programme you are doing, banks will assess your eligibility for a PCDL by considering other factors such as how long you have been living in the UK and your credit history, before making a decision on your application. If your application is successful, you can usually borrow between £300 and £10,000 to pay for:

  • course costs such as fees, books, travel and childcare
  • living costs such as rent, food and clothing if you are unemployed or working less than 30 hours per week

It is advisable to get a decision on your PCDL application before you start your programme, otherwise if your PCDL application is turned down after you have started, you might have to take time out or leave due to a lack of funds.

To request an application pack and to discuss your eligibility for a PCDL with an adviser, contact The National Careers Service on 0800 100 900. Other contact options include webchat, an online forum and a free callback service.

There is more information on PCDLs on the gov.uk website.

There is also a step-by-step guide to applying for a PCDL and advice about repaying PCDL’s to try and minimise the overall amount of interest you pay here.

EU+

You can apply to the Postgraduate Loans Scheme or for a PCDL if you have been ordinarily resident in the UK for at least three years before the start of your programme, and you intend to work in the UK or elsewhere in the European Economic Area after you complete it.

Can I take out a Postgraduate Loan and a PCDL at the same time?

The Skills Funding Agency have advised that students can apply for both a Postgraduate Loan and a PCDL if a Postgraduate Loan would not provide you with sufficient income. You are advised to first apply for a Postgraduate Loan as the interest rate is less, repayments are income contingent, and it does not require a credit rating. If the Postgraduate Loan does not meet your expected expenses, you can try applying for a PCDL to increase your funding. It is likely that you will need to have prepared a budget for your PCDL application showing your expected expenditure, to show how much funding you need. You may find it useful to use our online budget planner to help you with this.

Before taking out both loans, you should think very carefully about whether you will be able to afford the repayments of two loans after course completion. See the previous section ‘What do I need to consider before taking out loans?’

Shariah-Compliant Loans

Islamic Sharia law prohibits 'Riba', which means the paying and receiving of interest for profit. The prohibition is usually applied to excessive or unreasonable interest but is sometimes deemed to include the commercial rate of interest paid on a Professional and Career Development Loan, Student Finance loan, bank overdraft or credit card. For more information on Shariah-Compliant loans see the Advice and Counselling Service Student Loans and Shariah law webpage.

Other Loans

Other bank, private and payday lending loans are available. They may seem attractive but their terms and conditions such as high interest rates or immediate repayments tend to make them unsuitable for students.

A credit card is another type of loan which enables you to borrow money. Unless you pay off the balance in full every month, you will be charged interest. Although there are some 0% interest and balance transfer offers, there can be hidden charges such as transfer fees as well as high interest rates once the offer period ends. Always check the terms and conditions before taking a credit card and make sure you know what the interest rate is, how you will afford the repayments and what you will be charged if you fail to make the minimum monthly repayment.

If you already have credit cards and cannot afford to make repayments or you are only making the minimum monthly repayment and being charged high levels of interest, contact a Welfare Adviser in the Advice and Counselling Service for advice about your options. You might also find it helpful to look at the debt section of our website.

Or you could contact the charity Stepchange for advice about your options.


Disclaimer:
Law, regulations and policies can change quickly. The information on our website is given in good faith and has been carefully checked but QMUL cannot accept responsibility for any errors or omissions. QMUL is not responsible for the content or reliability of the linked websites which are provided for further information.