Loans for students

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Can I take out a loan as a student?

Yes, it is possible to get loans for students. Even with a Student Loans Company (SLC) loan, which covers tuition fees and helps with maintenance costs, you may find you’re still struggling with money.

A personal loan could help with additional living costs or larger expenses such as buying a car. But as a student, it’s unlikely you’ll have much of a credit history or a stable income, so your options may be limited.

If you haven’t had the chance to build up a good credit score, lenders won’t know if you can be a responsible borrower. And if you have little income, they may question your ability to make your repayments.

For these reasons, as a student, lenders may consider you a high risk. If they do offer you a loan, it will likely come with a higher interest rate.

That’s not to say affordable loans for students aren’t out there. Managed responsibly, a loan could help you build your credit score, giving you access to better deals in the future.

Types of loans for students

There are a few loan options you might want to consider as a student:

Personal loans for students

A personal loan allows you to borrow a lump sum of money, then pay it back over an agreed period (called the term). The amount you borrow, plus interest is typically paid back in fixed monthly instalments.

Personal loans are unsecured. This means you don’t have to put up an asset as security against the loan. But interest rates can be high, especially for those with low credit scores.

Guarantor loans for students

A guarantor loan can be an option if you don’t have a credit history. A family member or close friend agrees to pay back the loan on your behalf if you fail to make the repayments. Interest rates can be higher than for personal loans, so you and your guarantor need to be fully aware of the risks.

Secured loans for students

With a secured loan, you’ll need to put up an asset like a house, car or even valuable jewellery, as security. Secured loans may offer lower interest rates and longer terms than other loans. But you risk losing your asset to the lender if you fail to keep up with your repayments.

Short term loans for students

Short-term loans are emergency loans that could be used to cover an unexpected expense. Interest rates can be considerably higher and the repayment terms much shorter than for a personal loan.

Student finance

The government-owned Student Loans Company (SLC) offers student loans to cover tuition fees and help with maintenance costs while you’re studying. You only need to start paying back the loan once you earn over a certain threshold.

Find out more about student finance for undergraduates at GOV.UK

Master’s loans

For those who have just graduated, a government-funded Master’s loan can help with course fees and living costs if you continue your post-graduate education.

As with an SLC loan, you won’t have to start paying back your Postgraduate Master’s Loan until your income is over a certain threshold.

Find out more about graduate loans.

What can I use a personal student loan for?

A personal loan could be used for almost anything you want. For example:

To buy a car
Extra books and materials for your course
An emergency loan to replace a broken laptop.

Lenders may ask what you want to use the money for. But as long as you don’t want it for a house deposit, gambling or to loan to someone else, they don’t usually have many limitations.

What’s the difference between student loans and loans for students?

Government student loans are administered by the Student Loans Company (SLC). To get an SLC loan, you must provide confirmation that you’re enrolled in an eligible further education course.

SLC loans are divided into two parts:

Tuition fee loan – this is paid directly to your university or college.
Maintenance loan – this is paid directly to you and deposited into your bank account at the start of each term.

You only need to start repaying the loan once you earn over a certain amount. The repayment threshold depends on which ‘plan’ you are on, but will be at least £25,000 a year. Repayments will be taken directly from your salary at the same time as your tax and National Insurance.

If you’re self-employed, HMRC will work out how much you owe from your tax return.

Private personal loans for students work very differently. Your lender will decide how much you can borrow, for how long, and what interest rate they’ll charge. The terms and conditions of your loan (if you’re offered one) will depend on your credit rating, the amount you’re borrowing and the length of your loan (term).

One of the biggest differences is that you’ll have to start paying back a personal loan straight away, no matter how much you earn. Late or missed monthly repayments can damage your credit score making it harder to get credit in the future.

What alternatives are there to loans for students?

Depending on how much you want to borrow, and for how long, there may be cheaper alternatives to loans for students.

Student overdrafts

Many student bank accounts offer kinder terms including interest-free student overdrafts.

Student overdrafts may be available up to £3,000 depending on the bank. Unlike a standard overdraft, you won’t usually be charged interest for using your student overdraft until you leave university.

Student credit cards

Student credit cards are a useful way of spreading the cost of big purchases over several months.

Student credit cards don’t usually charge an annual fee. They may also come with a low credit limit to prevent you from overspending and taking on too much debt.

As long as you keep up with the repayments, a student credit card could help you build your credit score. This could make it easier to get low APR deals on credit cards, a loan or mortgage in the future.

How much can a student borrow?

Most personal loans allow you to borrow up to £25,000. However, the amount you’ll be offered depends on your credit score, income and how much you can afford to pay back each month.

As a student, it’s unlikely that you’ll be able to borrow up to the maximum amount.

What to consider before taking out a personal student loan

Taking on a loan is a serious financial commitment. You should consider very carefully if it’s the right option for you. Debt can be so easy to build up, especially if your finances are tight. If you struggle to keep up with the repayments, things could easily spiral out of control.

When considering a personal student loan, it’s important to look at how much it will cost you overall.

A shorter-term loan means higher monthly repayments, but you’ll pay less interest overall. A longer-term loan means lower monthly repayments. But as you’ll be paying interest for longer, the loan will cost you more overall.

And always remember the golden rule: only borrow what you can comfortably afford to pay back.

Our loan calculator can give you a rough idea of monthly repayments, interest and overall cost of a loan to help you work out what you could afford to borrow.

Try our loan calculator

Am I eligible for a personal loan?

Whether you’re eligible for a personal loan depends on the lender, as each one has their own eligibility criteria.

Generally, to be eligible for a personal loan, you must:

Be 18 or over
Be a UK resident
Have a regular income
Be able to afford the repayments
Be registered to vote
Have a UK bank account

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.

Compare personal loans for students

You don’t have to limit your search to loans specifically targeted at students. Our eligibility checker can give you an idea of which personal loans you’re likely to be eligible for without affecting your credit score.

Check your loan eligibility

What to do if you’re struggling

With the rising cost of living, student life can be tough if you’re constantly strapped for cash. Debt is a problem that many are tackling, students or not.

If you’re struggling to keep up with your loan repayments, talk to your lender. You might be surprised at how helpful and supportive they can be. They may be able to offer you a payment holiday, or help you work out a more affordable payment plan.

You can also get expert advice on how to manage debt from organisations such as:

Frequently asked questions

How much is a student loan in the UK?

Student loans in the UK are available up to £9,250 a year to cover tuition fees. Depending on where you live and what your household income is, maintenance loans to help with living costs are available up to £13,348.

Do Halal student loans exist?

As yet, Halal student loans do not exist. SLC student loans charge interest, which is forbidden under Sharia law. The government is planning to introduce alternative Sharia-compliant student finance, but it is still uncertain when this will happen.

Can you be refused a loan as a student?

Yes, it’s harder to get a loan as a student, so there’s a good chance you could be refused.

What should I do if I’m refused a personal student loan?

If you’re refused a loan, don’t apply for another one immediately. Loan applications are marked on your credit file. Too many over a short period can damage your credit score.

The best thing to do is improve your credit rating before you apply again. Simple ways to build your credit score include: