Graduate loans
Find out what loan options are available after you graduate, including government loans and secured or unsecured loans.
Read our guide to see which is the best choice for you.
Find out what loan options are available after you graduate, including government loans and secured or unsecured loans.
Read our guide to see which is the best choice for you.
What is a graduate loan?
A graduate loan is specifically designed for people who are about to finish, or have just finished university.
Once you graduate, it could take a while before you feel financially secure. A graduate loan could help with post-graduation expenses such as:
- Moving to a new city
- Rent and furnishings for your new home
- Continuing your education.
What types of graduate loans are available?
There are two types of loans specifically designed for graduates.
Postgraduate student loans
The Postgraduate Master’s Loan is a government loan designed to help cover tuition fees and living expenses if you want to continue your education. It can help to ease the immediate financial burden while you focus on your postgraduate studies.
You can borrow up to £12,167. You’ll start repaying it when you earn more than a certain amount. The loan is available to people who normally live in England. There are different funding options for those who normally live in Wales, Scotland or Northern Ireland. Other postgraduate student loans are available from private lenders.
Graduate loans
Graduate loans are offered by banks and other lenders. Graduate bank loans are typically only available to people who already have an account with that bank. They may have lower borrowing limits than standard unsecured loans – up to a maximum of £10,000.
Compare the Market doesn’t offer loans specifically for graduates but you can compare a wide range of loan products with us.
Comparing loans
You can’t compare graduate loans with Compare the Market, but you can compare unsecured and secured loans with us.
Are graduate loans worth it?
As with any kind of borrowing, graduate loans have their pros and cons. It’s important to think carefully weigh up your options before taking on more debt.
Advantages
- You can spread the cost of your loan over months or years
- The Postgraduate Master’s Loan won’t be marked on your credit file, so it won’t affect your credit score
Disadvantages
- Late or missed graduate loan payments could damage your credit score
- Taking on a further loan could leave you struggling with accumulating debt.
How to apply for a graduate loan
Application processes will vary depending on the lender.
If you have a student bank account, it’s likely to be transferred to a graduate account once your course finishes. Your first step is to then ask your bank whether they offer graduate loans.
If your bank doesn’t offer graduate loans, you’ll need to research other lenders. However, if you’re thinking of switching banks, providers may require you to have a bank account with them for a certain amount of time before you can apply for a graduate loan.
For a Postgraduate Master’s Loan, you’ll need to apply through Student Finance England. You can apply through your existing account or set up an account if you don’t already have one. For more details on how to apply for a Postgraduate Master’s Loan, see GOV.UK
As well as loans, grants and bursaries are available to fund postgraduate studies. You can search for them on the Prospects website.
How much does a graduate loan cost?
The total cost of your loan will depend on:
- The amount you’re borrowing
- The APR – the annual percentage rate shows the interest and any fees you’ll be charged over the course of a year.
- The loan term – how long you’re borrowing for
Only borrow what you can comfortably afford to pay back. And make sure to include your loan repayments when working out your monthly budget. Setting up a direct debit will help you avoid getting into trouble with late or missed payments.
You should also think carefully about the loan term. A shorter loan term means higher monthly repayments, but you’ll pay less interest overall. A longer loan term means lower monthly repayments, but the total cost of the loan will be more.
Use our loan calculator to help you work out how much a graduate loan could cost you.
What are the alternatives to a graduate loan?
Depending on how much you want to borrow and for how long, there are alternative financing options you might want to consider:
- Arranged overdraft – can be an option if you only need to borrow a relatively small amount of money in the short-term. Graduate bank accounts often offer interest-free arranged overdrafts.
- 0% interest credit card – if you make at least the minimum monthly repayments and pay off the full balance before the 0% period ends, you won’t pay a penny in interest.
- Unsecured loan – you could potentially borrow up to £25,000 without putting up an asset as security. However, interest rates may be higher as there’s more risk to the lender. And you may need to have a good credit score to qualify for this type of loan.
- Secured loan – you’ll need to put up an asset like your home or car as collateral. Interest rates may be lower, but you could risk losing your asset if you can’t make the repayments.
- Guarantor loan – an option if you’re struggling to find a loan because of a poor or little credit history. You’ll need a family member or friend who can guarantee that they’ll make the loan repayments if you’re unable to.
What should I consider when comparing loans?
1. Compare loan options
When comparing different loan options, you’ll want to consider the APR, term length, additional fees and the total cost of your loan.
Use our loan calculator to get an idea of how much you could afford to borrow. It will give you a breakdown of monthly repayments, how much interest you’ll pay and how much the loan will cost you in total.
2. Check your eligibility before you apply
When you formally apply for a loan, it will be marked on your credit file. This can affect your credit score.
Before you apply for a loan, it’s a good idea to check your credit report. You’ll be able to see your credit score and check for any errors that may affect your application.
Check your credit report for free
Then, use our loan eligibility checker. This will show you which loans you’re likely to be accepted for before you apply. It’s a soft credit search, so it won’t affect your credit score in any way.
3. Apply for a loan
Most lenders will let you apply for a loan online. If your application is accepted, your money should be in your account within a few days (sometimes, within hours if you’re an existing customer).
4. Pay back your loan
Start paying back your loan in fixed monthly instalments for the agreed length of time.
Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.
Frequently asked questions
What can I do if I’m rejected for a graduate loan?
Ask the lender why your application was rejected. It could be that your credit score is too low, or you don’t meet their affordability criteria.
Take steps to build your credit score before you re-apply. This will give you a better chance of being accepted if you choose to re-apply for a graduate loan or another type of loan.
Who can get a graduate loan?
Exact eligibility requirements depend on the lender you choose. But generally, to get a graduate loan you’ll need to have recently graduated, or be about to graduate. You’ll also typically need to be:
- 18 or over
- A UK resident
- In regular employment.
Some lenders may also require you to earn over a certain amount. You may also need to have held a student or graduate account with them for a certain period.
The Editorial Team - Compare the Market
Experts in personal finance, insurance and utilities
Compare the Market’s Editorial Team is made up of industry experts with decades of experience in personal finance, insurance and utilities. Each of our authors has an area of expertise, where they can share their extensive experience to help you get a better deal, by finding the right product and saving money.