Loans for students in the UK

Student finance covers tuition fees and some living costs, but it rarely stretches far enough. This guide explains your borrowing options, what they cost, and which types of credit to approach with caution.

This article is for information only. It does not constitute financial advice and does not take your personal circumstances into account. Before making any borrowing decision, you may want to speak to a qualified money adviser or visit a free debt-help service.

What borrowing options are available to students?

Students in the UK have access to several borrowing routes, and they work quite differently from one another. The government-backed Student Loan is usually the starting point. Beyond that, bank student accounts with interest-free overdrafts are the most widely used option. Personal loans and credit cards from commercial lenders exist too, but they come with costs and conditions that are worth understanding before you apply.

In plain English: the type of borrowing that is most suitable depends on what you need the money for, how long you need it, and whether you have an income to support repayments.

How does a Student Loan work in the UK?

A Student Loan from Student Finance England (or the equivalent body in Scotland, Wales, and Northern Ireland) has two parts.

The Tuition Fee Loan covers your course fees and is paid directly to your university. You do not handle this money yourself.

The Maintenance Loan goes into your bank account to help with living costs such as rent, food, and travel. The amount depends on where you study, whether you live at home or away, and, in many cases, your household income.

The important bit is how repayments work. You only start repaying once your income passes a set threshold (currently £25,000 a year for Plan 2 borrowers in England, though this figure is subject to change). Repayments are taken as a percentage of earnings above that threshold, not as a fixed monthly amount. Anything unpaid is written off after a set number of years.

This structure makes the Student Loan quite different from a commercial loan. Repayments adjust with your earnings, and the debt does not follow you in the same way a personal loan would if you fell behind.

What if the Student Loan does not cover everything?

The maintenance loan, in particular, often falls short of actual living costs, especially in cities with high rents. There are a few places to look before turning to commercial borrowing.

University hardship funds. Most universities hold funds for students facing genuine financial difficulty. These can be grants (which do not need to be repaid) or short-term interest-free loans. Your student union or finance office can point you to what is available.

Bursaries and scholarships. Some universities and external organisations offer additional financial support based on subject, background, or household income. Worth checking before starting each academic year.

Part-time work. Many students earn some income during term time. This can help, though it is worth keeping track of how many hours fit around your studies without affecting your performance.

Credit unions. Credit unions are not-for-profit financial cooperatives. Some offer affordable small loans to students. Interest rates are capped by law, and credit unions tend to be more flexible about thin credit histories than high-street lenders.

What is a student bank account and how does the overdraft work?

Most of the major UK banks offer a dedicated student current account. The main advantage over a standard account is the arranged overdraft, which many banks offer at 0% interest up to a set limit.

This can be genuinely useful for short-term gaps in cash flow, such as waiting for your maintenance loan payment to arrive or covering an unexpected bill.

A few things to bear in mind:

• The 0% rate only applies to the agreed overdraft limit. Going beyond that limit typically triggers fees or higher interest.
• After you graduate, most banks convert the student overdraft into a standard graduate arrangement over a period of one to three years, before moving it to a standard overdraft rate. The terms vary by bank.
• An overdraft is still a debt. Borrowing up to your overdraft limit every term can become a habit that is difficult to break once you leave university.

The Financial Conduct Authority directed nine major banks and building societies in 2026 to improve access to basic bank accounts and address poor practices identified in a review. If you are having difficulty opening an account, it is worth knowing that the largest banks are legally required to offer basic bank accounts to people who cannot access a standard current account.

Can students get a personal loan or credit card?

Commercial personal loans are available to students in principle, but lenders assess affordability and credit history when deciding whether to approve an application and at what rate.

Many students have little or no credit history. That can make it harder to be approved, or it can result in a higher interest rate being offered. The rate you are quoted may be significantly higher than the representative APR shown in adverts, because representative APR only needs to be offered to 51% of successful applicants.

Credit cards follow similar logic. A student credit card with a modest limit can be a way to build a credit history if used carefully and cleared in full each month. However, if the balance is carried month to month, interest charges build up quickly.

Before applying for any commercial credit, it can help to use a soft-search eligibility checker. A soft search does not leave a mark on your credit file, whereas a full application (a hard search) does. Multiple hard searches in a short period can affect your credit score.

Warnings: high-cost credit and online promotions targeting students

This section covers the borrowing types that carry the most risk for students. These are worth reading carefully.

Payday loans and high-cost short-term credit. Payday-style loans come with very high interest rates and are designed to be repaid within days or weeks. They are rarely a sensible option on a student budget. If you find yourself relying on this type of borrowing regularly, that is often a sign that a deeper budgeting problem needs attention.

Unregulated buy-now-pay-later (BNPL). Some BNPL products are not regulated by the FCA, which means they fall outside the consumer credit protections that apply to standard loans and credit cards. Missing a payment can result in fees and, in some cases, debt being passed to a collections agency. Regulation of BNPL has been under discussion by the UK government, but the rules are not yet fully in place.

Logbook loans and vehicle-secured borrowing. A logbook loan uses your vehicle as security. If you fall behind on repayments, the lender can repossess it. This type of lending has a poor track record: in July 2026, Logbook Lending Limited (which traded under several brand names) entered administration. Students who encounter adverts for this type of borrowing are advised to look carefully at the terms and the lender's FCA registration status before proceeding.

Social media promotions and finfluencers. Some financial products are promoted online by individuals who are not authorised to give financial advice or promote regulated products. The FCA has confirmed active enforcement action in this area, including arrests and hundreds of social media takedown requests. A social media post or video making a loan or credit product sound attractive is not a substitute for reading the full terms and checking whether the lender is on the FCA register.

The important bit is this: if a credit product is being promoted on social media or by an individual rather than a regulated firm, check the FCA register before proceeding. The register is free to search and takes a few minutes.

Rent-to-own schemes. These allow you to take goods home immediately and pay in instalments, but the total cost over the contract period is often several times the item's retail price. Students seeking household essentials may find cheaper options through second-hand retailers or community schemes.

What to check before borrowing

Before taking on any commercial credit, it can help to work through a few questions:

• Do you need the money now, or can the purchase wait? Delaying a non-essential purchase is often cheaper than borrowing.
• Have you checked university hardship funds? These exist for situations like this and may offer a grant rather than a loan.
• What is the total amount repayable? Look beyond the monthly payment. The total cost over the full term matters, especially on long-term credit.
• What happens if you miss a payment? Check the consequences in the product's terms before you sign. Missing payments can affect your credit file and trigger charges.
• Is the lender on the FCA register? You can search at fca.org.uk. This takes just a few minutes and confirms the lender is authorised to offer consumer credit.
• Have you used a soft-search checker first? This lets you see your likelihood of approval without affecting your credit score.

Free help if money is getting difficult

If borrowing is starting to feel unmanageable, or if you are struggling with existing debts, free confidential support is available.

• StepChange Debt Charity: 0800 138 1111 (freephone)
• National Debtline: 0808 808 4000 (freephone)
• MoneyHelper: 0800 138 7777 (freephone)

Your university's student welfare or finance team may also be able to help, and some universities have partnerships with independent money advisers who offer free sessions to enrolled students.

Frequently asked questions

Can students get a personal loan from a bank?

Some lenders do offer personal loans to students, but approval depends on your income, credit history, and the lender's own criteria. Many students find it harder to qualify because they have little or no credit history. Eligibility checks vary widely between lenders, so it can help to compare options carefully before applying.

Is a student overdraft the same as a regular overdraft?

Not quite. Many banks offer a 0% interest arranged overdraft as part of a student current account, up to a set limit. A standard overdraft on a non-student account usually charges interest. After graduation, student overdrafts typically convert to a standard arrangement over a set period, so it is worth checking the terms before you rely on one.

What happens to my Student Loan if I drop out?

If you leave your course early, your tuition-fee loan is adjusted to reflect the portion of the academic year you attended. Your maintenance loan for that term is usually kept. Repayments still only start when your earnings pass the income threshold, regardless of whether you completed your degree.

Are payday loans a reasonable option for students in a cash crisis?

Payday loans carry very high interest rates and short repayment windows. For students facing a short-term shortfall, free options such as a university hardship fund, an interest-free student overdraft, or a credit union loan are worth exploring first. Payday-style borrowing can create debt that is difficult to clear on a student income.

Does taking out a loan affect my Student Loan entitlement?

Commercial loans do not directly affect your Student Finance entitlement. The two are assessed separately. However, any extra income reported to Student Finance England (or the equivalent body in your nation) could affect a means-tested maintenance loan, so it is worth checking the rules for your situation.

How can I check whether a lender is authorised to offer credit?

The Financial Conduct Authority maintains a register of authorised firms. Before borrowing from any lender you are unfamiliar with, checking the FCA register can help you confirm it is regulated. Lenders that are not on the register cannot legally offer consumer credit in the UK.

Related reading

For a broader look at borrowing as a young person in the UK, the parent guide covers the full picture: Loans for young people.

You may also find these tools useful:

• Budget planner, to map income and outgoings before deciding whether to borrow.
• Loan repayment calculator, to see the true cost of a commercial loan at different rates and terms.

Sources

• UK Government, Student Finance guidance (gov.uk)
• MoneyHelper, Student money and borrowing pages (moneyhelper.org.uk)
• Financial Conduct Authority, Consumer credit register and consumer information (fca.org.uk)

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