Unsurprisingly, the Government’s new Postgraduate Loan comes with a fair share of small print that can be hard to get your head around at first. There’s a lot of info to take in, but luckily we’ve done some of the hard work for you by simmering it all down to the cold hard facts.The new funding will be available from 1st August 2016, so if you’re considering doing a Master’s Degree now or in the future, read on to find out exactly what’s on offer, and whether the loan is right for you.
What’s on this page?
Who’s eligible for the Master’s Degree Loan?
Credit: Ethan Lofton – Flickr.comAs with anything that involves the government parting with money, working out if you’re eligible can be particularly complicated! We’ve tried to keep things simple: if you can answer ‘yes’ to all 6 questions below, you’ll most likely be accepted for the loan.
- Are you a UK citizen who has been living in the UK for the past three years or more (so you haven’t been living abroad anywhere during this time)?
- Do you ‘normally’ live in England?
- Are you under the age of 60?
- Is this your first Master’s or equivalent degree (not including Postgraduate Diplomas or Certificates of Education)?
- Are you applying for a full Master’s course (as opposed a graduate diploma or equivalent)?
- Are you applying to study at a UK university (whether in England, Scotland, Wales or Northern Ireland)?
Or, if you’re not a UK citizen but you are an EU citizen, the current terms are:
- You must be living in the EU/EEA for the last three years and be an EU citizen.
- You need to confirm you’ll be living in England on the first day of your course.
So yes – weirdly this does mean it’s easier for someone from mainland Europe to get their hands on this loan than it is for a UK citizen living outside of England. We don’t really have any explanation there to be honest!
For those UK citizens who don’t currently live in England…
At the moment, the postgraduate loan is only available to those UK citizens living in England. While the loan is available to all UK citizens, in order to apply you’ll need to have an address in England and be able to provide proof that you’re not living there purely so you can apply for the loan… yeah, we told you it was complicated!
A smaller loan is available to Master’s students in Scotland (more details here) and there’s talks of introducing a PGL to students in Northern Ireland in 2017. No news on the situation in Wales, but sign up to our newsletter and we’ll keep you posted!
How much does a Master’s cost?
Credit: Petras Gagligas – Flickr.comThe cost of Master’s courses in the UK vary depending on the course and university. The Government have estimated that fees average at around £8,000 which is why the limit for the loan has been set at £10,000.
To find out exactly how much your course costs, check out the university’s own website or a Master’s course comparison directory.
How is the loan paid?
The loan money is paid directly to you and will be paid into your bank account in three instalments each year, for up to two years of your course, and you’ll be able to ask for a maximum of £10k.If your course is as short as one year or as long as four you will still only be able to claim £10,000 in total (that’s not per year).
You’re free to spend the loan however you see fit – it might even be that you have some spare cash left over after paying your tuition fees, which could then be put towards rent, or even course materials if you’re feeling particularly responsible! On the other hand, your course could cost more than £10,000 in which case you’d have to fund the difference yourself.
If you borrow less than £10,000 you can increase the loan amount during your course, and we would advise borrowing the full £10,000 if you can, as it’s unlikely that you’ll get a loan with lower interest from anywhere else in the near future. If you’re worried you’ll spend it all too quickly, why not put any leftover cash into a student savings account and watch it grow?
It’s also worth knowing that the money isn’t income-contingent: how much you, your partner or your folks earn won’t affect how much of the loan you can apply for.
WARNING: It is possible that the loan could affect any benefits you receive from the government, as the PGL will be considered a form of income (we guess since you’re allowed to spend the money as you choose and it doesn’t go directly to universities). If you do receive any financial support form the government and wish to continue receiving it whilst you do your Master’s – it’s worth speaking to someone at the DWP (Department for Work and Pensions) about your situation before you apply.
How do I repay the Master’s loan?
- You’ll only start repaying the Postgrad Loan once you’ve left your course and are earning more than £21,000 a year (that’s £404/week or £1,750 a month).
- Loan repayments don’t start until May 2019, so even if you graduate in 2017, you won’t need to start paying it back for another two years.
- The thresholds track monthly or weekly income, not just how much you make in a year. You could earn enough to make repayments one month, but not the next –repayments flex around your income.
- Repayments are taken automatically from your salary (if you work for yourself it’ll happen through self-assessment).
- The first £21,000 of your income is ‘shielded’ from loan repayments. You then repay 6% on anything you earn above that.
- Income doesn’t just mean salary: some bank account interest and benefits could push you over the threshold. Arm yourself with the tax facts to see where you stand (and avoid over-paying!).
- Your loan starts gaining interest from the day you take it out until the day you clear the balance (so you’ll owe more than you actually borrow). Interest is charged at the rate of inflation plus 3%. This means how much interest you pay will go up and down along with inflation – for more explanation of student loan interest rates, read this blog post from us.
- As with the Undergraduate Student Loan, the PGL is not registered on your credit file meaning it won’t affect your credit rating.
- Anything you haven’t paid back within 30 years is written off. Whether you repay the whole lot depends on how much you go on to earn.
Head over to our loans lowdown to get the skinny on Student Finance – and why paying it back early isn’t always a winner!
How do I apply for the loan?
Applications are now officially open for the Postgraduate Loan! If you already have an account with Student Finance England (you will have one if you got your undergraduate loan from them), you can apply online here.If you don’t already have an SFE account, you can set one up now and follow the application instructions on their site to get started.
If you’d rather apply by carrier pigeon, you can download an application form to fill out and send to the SFE by post – download it here.
What if I already have a Student Loan?
You can still apply for the PGL if you already have an undergrad loan to pay off – but it’s worth knowing that you will have to start making repayments on both at the same time.Once you meet the salary threshold, you’ll pay 9% on anything above that to your regular student loan, plus 6% towards your Postgrad Loan.
However, you need to remember that both will be treated as separate loans and will not be joined together at any point.
Here’s a rough idea of what your monthly repayments may be on the postgrad and/or student loan:
| Yearly salary | Student Loan | Postgrad Loan |
|---|---|---|
| £21,000 | £0 | £0 |
| £25,000 | £30 | £20 |
| £30,000 | £67 | £45 |
| £40,000 | £142 | £95 |
| £50,000 | £217 | £145 |
Unfortunately, loan repayments don’t give you any tax breaks. Any income tax you owe is calculated on your salary before any Student Loan or Postgrad Loan repayments come out.
Is the Postgrad Loan a good deal?
If you don’t happen to have a spare ten grand lying about to pay for tuition, the PGL is a great door-opener as it makes it easier to study without having to slap down tons of money up front.The big criticism of the Postgrad Loan is that £10k may not be enough to cover some course fees, let alone living expenses – you might need other income as well as the loan to keep you going.
You’ll also want to give some thought to the repayments scenario: You could find you don’t earn enough to pay the whole loan back (which sounds like a win, right?). However, even temporarily earning enough to make repayments will affect your monthly take-home pay.
As your salary goes up (which is likely over time) and you fancy doing other things with the money – like getting a mortgage, for example – you’ll also be paying more towards your loan. Definitely worth thinking about!
WARNING: It’s always good to keep in mind that the government can unfortunately change the terms of student loans retrospectively at any point (we know, we think it’s appalling too).
This means it’s not completely off the cards that the repayment percentages could feasibly increase, or you could even see the repayment threshold decrease at some point (as you might’ve heard, the government recently chose to freeze the repayment threshold at £21k for undergraduate loans, after previously saying that it would rise average UK earnings increases – here’s our take on this).
It’s unlikely that a change will happen to the PGL terms, but unfortunately it’s not impossible. If anything does change it should be minimal (particularly since they caused such an uproar by making changes to the undergraduate loans).
Are there alternatives to the PGL?
There are loads of student loan alternatives available for those who are keen to enter postgraduate study but don’t qualify for the government’s proposed new loan.For example, you could try a Personal Career Development Loan, a 0% credit card or try applying to a charity, trust or foundation that offers funding privately (although this final option can be tough!). Try doing a scholarship search to see if any funding is currently available for your course.
Bonus tip: It’s also worth noting that some countries in the EU offer heavily subsidised or even free Master’s degrees to EU citizens (whilst we’re still part of the EU, that is). Check out our top 5 cities in Europe where you can do a Master’s for free here!
Still need more info? Check out our Big Fat Guide to Student Finance 2016, or download our free Essential Student Guide to Finance ebook here for more.
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