Student LoansGovernment Student Loans

Government Student Loans

With the rise in tuition fees and the increasing cost of living in the UK, student loans are becoming more important than ever. When applying for such a loan, students will have a number of options available to them; however, the best option is to obtain a government student loan. This can be done directly or indirectly. More information is available from the Student Loans Company (SLC) website or

Why get a government student loan?

When it comes to student loans, the government is the most trusted lender. They also offer better interest rates when compared to normal loans, using the lowest measure between the Bank of England interest rate and the rate of inflation. Unlike, loans from banks and other organisations which require a regular monthly payment, a government student loan provides much more flexibility.

When taking out a normal loan, you will do so in the agreement that you make some form of regular repayment. The sum of money agreed will need to be paid regardless of your financial situation. A government student loan works on completely different principles.

Before any repayments are made, a student will have been graduated for one year and will need to be earning over a certain threshold. For students enrolled in university before September 2012, this income threshold is £15,000. For students taking out loans after September 2012, this threshold is set at £21,000.

Prior to 1 September 2012, interest rates are calculated using one of, the Bank of England base rate, plus 1%, or the rate of inflation (based on how much the price of retail goods increase). After 1 September 2012, the interest rate is the same as the inflation rate; however, during the time spent studying and when you earn more than £41,000 per year, it is the inflation rate plus 3%.

Government student loans are the best option

Government student loans are the cheapest, and in many cases, the only option available. Starting university before the age of 21, as many people do, will mean that there has been little opportunity to build a good credit history or, any credit history at all; because of this it will be hard to obtain any other form of credit. Even for those that are able to find alternative loan solutions, the chances of finding terms as attractive as a government student loan are slim.

What to think about

The biggest decision you will need to make is whether you need a loan or not. If you are able to get through university with the help of family and a part-time job, this is the best option. You should always remember that a student loan is no different to any other in that it has to be paid back.

You can get a student loan from the government to cover tuition fees and maintenance costs; however, the amount of loan will be determined by individual circumstances such as your annual household income.