The Salary Calculator

Student Fees, Finance, and Funding: What You Need to Know 

by Madaline Dunn

With the new school year commencing, millions of students across the country will be mulling their university choices — and how they’ll fund their education.

But while record numbers are being accepted into universities and colleges this year, research shows that students are concerned about costs.

At the same time, recent data from the Higher Education Policy Institute (HEPI) shows that misconceptions about student loans abound.

To clear up the confusion, this week at The Salary Calculator, we’ll answer:

• How have loans, fees and thresholds changed?
• How much can students borrow?
• Is student finance enough to cover costs?
• How can students financially prepare for university?

How have loans, fees, and thresholds changed?

Over the last two decades, a lot has changed across student fees, finance, and funding. With tuition fees hitting £9,535 this year, the days of the £1,000-a-year courses seem but a distant memory.

Meanwhile, maintenance grants, which previously offered students up to £3,387 a year, were scrapped back in 2017 and replaced with maintenance loans for living costs.

And interest rates? That depends on your plan. Currently, it’s:

• 3.2% if you’re on Plan 1 (you started your course before 1 September 2012)
• 3.2% to 6.2% based on annual income if you’re on Plan 2 (you started your course between 1 September 2012 and 31 July 2023)
• 3.2% if you’re on Plan 5 (you started your course after 1 August 2023)
• 6.2% if you’re on a Postgraduate Loan plan

That said, you’re charged interest from the day your first payment is made, regardless of your plan.

Your plan will also determine the salary threshold at which you’ll start repaying your loan.

For Plan 1, you’ll start paying back your loan at £26,065. With Plan 2, this is £28,470, and for Plan 5 it’s £25,000.

For Plans 1, 2 and 5, you’ll pay 9% of your income.

For postgraduate loans, the threshold is £21,000, at which point you pay 6% of your income over the threshold.

If you would like to see how much this will take off your pay each month, use The Salary Calculator‘s Student Loan options to get an illustration.

For those commencing university in 2025, loans will be wiped after 40 years — up from 30. However, many students will never pay back their loans in full. For full-time undergraduates starting their courses in 2024/25, government forecasts are that this figure stands at just 56%.

How much can a student borrow?

While tuition loans cover your course fees and are paid directly to your university, maintenance loans are means-tested. When you apply, your household income and where you live and study will be factored into how much you’ll receive.

For those from households with an income of £25,000 or below and living at home, you’ll be entitled to £8,877. This rises to £10,544 if you live away from home outside London.

Earlier this year, figures from the Student Loans Company (SLC), the organisation which administers loans and grants to students in colleges and universities, revealed that in 2024-25 the amount of debt students graduated with was up nearly 10% from the year prior, reaching an average of £53,000.

Indeed, this echoes numbers obtained by the BBC last year, which found that 1.8 million people owe at least £50,000 in student loans, and an additional 61,000 have “balances of above £100,000.”

Despite this data, a recent report from King’s College London found that people “underestimate” the true level of debt students take on by £10,000, with average student debt exceeding the US by “nearly £6,000 more than the equivalent figure in the US.”

Is student finance enough to cover costs?

But while student debt is increasing, research suggests that students are still struggling. According to the Centre for Research in Social Policy (CRSP) at Loughborough University, the maximum maintenance loan covers “only half of what is needed for a minimum socially acceptable standard of living.”

“The financial landscape facing current students is among the trickiest ever”

Findings from the study, conducted with HEPI and TechnologyOne, revealed that for a three-year course, students would need £61,000, increasing to around £77,000 in London.

“The financial landscape facing current students is among the trickiest ever. Our long-running Student Money Survey has routinely found that Maintenance Loans are not enough to live on, but in recent years, the situation has become significantly worse,” said Tom Allingham, student finance expert at the money website Save the Student.

Allingham shared that Save the Student’s latest survey found that funding now falls short of living costs by an average of £504/month. This, he said, is over double the shortfall the organisation discovered in 2020 (£223).

“As a result, students are having to cut spending on even the most basic of necessities, with 9% telling us they’d used a food bank in the past year, and 67% saying they skip meals at least some of the time,” added Allingham.

Leacsaidh Macdonald-Marlow, student voice assistant at Student Minds, echoed this, noting that the current financial landscape, in particular the cost of living crisis, is putting “immense pressure on students.”

“A majority of students now do part-time or full-time work alongside their studies in order to afford necessities like rent, and this affects overall student wellbeing, time management, energy, and subsequently academic stress and performance,” noted Macdonald-Marlow, who said that maintenance loans fail to provide students with “any real sense of financial security,” across almost all socioeconomic backgrounds.

“Students also have a lot of worries surrounding debt”

Indeed, earlier this year, a survey published by Advance HE and the Higher Education Policy Institute (HEPI) found that over the last few years, there’s been, what they called a “dramatic rise” in the number of full-time students working during term time. In 2025, the figure sits at just under 70%, up from 56% the year before and 42% in 2020.

“Students also have a lot of worries surrounding debt, and often feel ashamed or unable to talk to anyone about these anxieties, which only compounds financial stress and a desire to work even longer hours during term-time,” commented Macdonald-Marlow.

Allingham says that a lack of funding underpins this financial struggle. He explained that, in recent years, funding has fallen “drastically short” of inflation, amounting to “huge real-terms cuts” of up to £1,906 in 2024/25, according to the Russell Group.

“We’re urging the government to increase Maintenance Loans above and beyond the rate of inflation, to restore funding to previous levels and prevent students from being condemned to a never-ending cost-of-living crisis,” said Allingham.

Meanwhile, Macdonald-Marlow noted that, as outlined in its Student Mental Health Manifesto, Student Minds recommends the reintroduction of maintenance grants, increased maintenance loans and a fairer repayment scheme.

How can students prepare financially for university?

But, with no current plans to increase the maintenance loan, or indeed reintroduce maintenance grants, how can students best financially prepare for university next year?

“The first thing any student should do to get their finances in order is open the right student bank account,” said Allingham, who explained that instead of being swayed by sign-up freebies, students should prioritise those accounts with interest-free overdrafts instead.

“This is probably the safest and most easily-accessible form of emergency cash at uni, and will be far more useful than any freebie a bank can offer,” added Allingham.

Meanwhile, Leon Ward, CEO of financial education charity Money Ready, recommended that students create a clear picture of their finances. “Work out what you need to spend money on (rent and food, for instance) vs what you’d like to spend money on (such as new trainers) and check that against the money you have coming in.”

Once students understand their financial situation, Ward suggests looking at ways to fill any gaps. “If you need to spend less, check out special student discounts on sites like Student Beans, UniDays or NUS Extra, and get savvy with meal-planning to avoid food waste. By budgeting like this, you’ll enjoy your uni experience without getting into too much debt.”

The money charity provides guidance on this via the hashtag #GetUniReady on its socials and website.

Alongside bank accounts and budgeting tips, Allingham advises that prospective students should also look into bursaries, scholarships and grants to see if they’re eligible for any free cash.

“Despite what many people think, this money isn’t just reserved for those with the highest grades, from the lowest-income backgrounds or who excel in a particular subject,” he explained, adding that there are funds for all kinds of “unusual reasons,” including being a vegetarian or having the surname ‘Graham.’

The Student Minds website similarly offers advice on how students can access additional financial support, such as bursaries or hardship funds.

And, for those already eyeing part-time job opportunities, Macdonald-Marlow recommended looking within your university or Students’ Union, noting that jobs are often advertised via the SU website and/or Unitemps.

“These employment opportunities are built for students, offering hours that fit around your university work, and paying fair wages,” she added.

Tags: student finance, student loans, tuition fees

Updated for April 2021

by Admin

The Salary Calculator has been updated with the tax rates which take effect from 6th April 2021. Some of these rates are still subject to confirmation by the relevant governments, but the calculator will be updated if any of them change.

The biggest change is the introduction of “Plan 4” student loan repayments, for Scottish students. If your undergraduate loan is administered in Scotland and due for repayment you will start repaying under Plan 4 from April 2021, even if you have been previously repaying under Plan 1. Those already repaying their loans will switch from Plan 1 to Plan 4 repayments in April. This change does not affect students in England, Wales or Northern Ireland, and nor does it affect repayment of postgraduate loans.

If you would like to see the effects of this change, and any others from April 2021, try out The 2021 Salary Calculator by choosing the “2021/22” tax year from the drop-down box.

Tags: April 2021, budget, income tax, national insurance, Pay As You Earn, student loan company, student loans, tax rates, The Salary Calculator

New option – reduced pay

by Admin

With the coronavirus outbreak affecting businesses around the country, a number of employers have had to make the decision to ask staff not to come in to work. The government announced last week that, to encourage employers not to lay staff off, they will pay up to 80% (to a maximum £2,500 per month) of staff members’ salaries if they keep them on the payroll. As well as trying to ensure that employees still receive some pay, the plan is to keep the workers available so the economy is well placed to start up again once the virus threat is reduced.

I have added an option to the existing Pro-Rata Calculator which allows you to enter a percentage of salary instead of reduced hours. Some employers will continue to pay their employees the full amount during the pandemic, others may only be able to pay what they are receiving from the government. And of course, for other reasons you might be receiving a percentage reduction in salary. If this applies to you, enter your full-time salary and full-time hours, then enter the percentage of your salary that you will be receiving. With tax and pension deductions etc taken into account, you might find that the reduction is not quite as bad as you thought. For example, someone on the UK median full-time salary (which is about £30,000) normally takes home £1,915 per month after tax and 5% auto-enrolment pension contributions. On 80% salary, they would take home £1,595, which is a significant drop but still just over 83% of normal. Other deductions like Student Loan repayment could make the overall reduction to a slightly more manageable 85%.

Also of interest might be the new Sick Pay Calculator, which I launched last week to help people who have had to take a short period of time off on reduced pay.

Tags: coronavirus, covid-19, Economy, furlough, HMRC, income tax, layoff, national insurance, Pay As You Earn, pension, pro-rata, reduced pay, student loans, The Salary Calculator, unemployment

New tool – Sick Pay Calculator

by Admin

With many people having to take time off work due to the current situation with COVID-19, I thought I would try to create a sick pay calculator. If you will be taking time off, and your employer’s policy states that you will receive reduced (or no) pay for your time off, the Sick Pay Calculator will try to estimate the effect on your take-home pay.

You can enter the number of days on a percentage of your normal pay (e.g. 50% for half pay), the number of days on Statutory Sick Pay (n.b. the calculator is not able to tell whether or not you are eligible for SSP, learn more from Citizens Advice), and the number of unpaid days. The calculator will use this information to estimate how your payslip will change.

Please note that different employers calculate things like unpaid leave in different ways, so the calculator’s results may differ from those on your payslip. Also, how much you will get paid for time off depends primarily on what your employer’s relevant policies state – you will need to know what you are entitled to before using the calculator.

Please let me know if you have any trouble using the calculator – I’ve tried to reduce the number of unexpected results, but it is possible with a lot of time off and with many options such as pensions and student loans applied that the answers given might be a bit unusual!

Tags: coronavirus, covid-19, HMRC, income tax, Jobs, national insurance, Pay As You Earn, Pensions, sick pay, student loans, The Salary Calculator, unpaid leave

April 2020 calculations

by Admin

The Salary Calculator has been updated with the tax rates which currently stand to take effect from 6th April 2020. I say “currently”, because there is a Budget taking place on Wednesday 11th March and it is possible that some changes to tax rates or allowances will be announced. If this is the case, the calculator will be updated with the latest values as soon as possible following the Budget.

At the moment, no changes to the tax-free personal allowance or income tax rates have been announced (apart from in Scotland, where some tax thresholds have been increased slightly). However, the threshold for when you start paying National Insurance has increased, meaning that National Insurance contributions will be reduced by up to £104 per year.

Those repaying their undergraduate student loans will also find that the repayment threshold has increased – for Plan 1 it will be £19,390, and Plan 2 £26,575 per year. Although this increase will reduce the payments you make in each payslip, it will of course mean that it takes longer to repay your loan.

If you’d like to see how the changes will affect you, head over to The Salary Calculator and remember to choose 2020/21 from the Tax Year drop-down box.

Tags: April 2020, budget, income tax, national insurance, Pay As You Earn, personal allowance, student loans, tax rates, The Salary Calculator