Government-backed loans of up to £10,000 will be introduced from August 2016 - a ground-breaking move for postgraduate education in the UK
The chancellor, George Osborne, confirmed the new loans system in his November 2015 spending review, revising several aspects of the earlier proposals following a public consultation.
Here are the key questions answered...
Is my programme eligible for a Masters loan?
Full-time taught and research Masters of all subjects, disciplines and qualifications - including MA, MSc and MBA - are covered, providing that they are worth 180 credits and last no longer than two years. Part-time and distance learning courses are also eligible, but only if they're studied at an intensity of at least 50% of their equivalent full-time counterpart (i.e. lasting no longer than four years).
While Masters of Research (MRes) programmes are eligible, PhDs will be covered by separate research loans - as outlined below. Other qualifications that aren't covered include the Postgraduate Certificate (PgCert), Postgraduate Diploma (PgDip) and four-year undergraduate Masters - though students of the latter will usually receive the undergraduate loan regardless. The Legal Practice Course (LPC) is ineligible, unless studied as part of a Master of Laws (LLM) programme. The only Masters titles not covered by the loans are Master of Architecture (MArch) and Master of Engineering (MEng), as these are both covered by undergraduate funding.
The Postgraduate Certificate in Education (PGCE) is also ineligible, though financial support for teacher training is widely available through the Department for Education. For more information, see funding your teacher training.
Am I eligible for a Masters loan?
- be aged under 60 when they begin the course;
- be studying at any university with degree awarding powers in England, Scotland, Wales or Northern Ireland;
- have lived in England for at least three years, though some exceptions may apply (see below);
- not have studied a Masters degree or PhD before.
Loans are intended for English students. However, Scottish, Welsh or Northern Irish students are also eligible - providing that they've lived in England for at least three years for a reason other than study.
Students from the European Union (EU), European Economic Area (EEA) or Switzerland are eligible if they've been ordinarily resident in one of these areas for at least three years for a reason other than study. Non-EU students are not eligible for the loan, unless they have the right to reside permanently in the UK; due to having refugee status, for example.
Entitlement to Disabled Students' Allowances (DSAs) will remain distinct from Masters loans or any other financial support that you receive, meaning that you can still claim DSA. For further information, see disability-related funding.
If you're not eligible for a Masters loan, see Professional and Career Development Loans.
How will I receive my Masters loan?
Loans are worth a maximum of £10,000; this means that they completely cover the cost of tuition fees for most courses, given that the average programme costs around £8,000. The notable exception is the MBA, which usually costs much more. You choose how much you'd like to borrow.
However, students are under no obligation to spend the loan on tuition fees; it can also be used for living costs or other study expenses. Students that receive other grants or finance will still be eligible for the Masters loan, but taking out the Masters loan may affect their eligibility for other grants or finance.
The loan will be paid directly to students by the Student Loans Company in three instalments per year, meaning that:
- students on one-year, full-time programmes may receive up to £10,000 in three instalments;
- students on two-year programmes may receive up to £5,000 each year, in three instalments per year;
- students on three or four-year, part-time programmes may receive up to £5,000 in each of their first two years of study, in three instalments per year.
Payments begin once the student's attendance is confirmed by the university. Loan instalments will stop if the student leaves the programme early or transfers to a different course that isn't eligible for the Masters loan. What's more, the money that has already been borrowed must be repaid.
How will I repay my Masters loan?
Loans will be repaid concurrently with the undergraduate loan, on an income-contingent basis at a rate of 6% on earnings over £21,000 - you will repay nothing until you earn this amount. Repayments will not begin for any student until 2019, but voluntary early repayments can be made. After 2019, students will repay the loan from the April after they graduate.
Interest rates are set at Retail Prices Index (RPI) + 3%. This means that the interest charged will be the current RPI percentage, plus an additional 3% - a favourable market rate. Interest will begin accruing as soon as the first payment is made to the student by the Student Loans Company.
Once you are employed and earning over £21,000 your employer will take repayments directly from your wage along with National Insurance and tax. If you are self-employed HM Revenue and Customs (HMRC) will calculate how much you need to repay on completion of your self-assessment tax return.
All student debt will be cancelled after 30 years, but most graduates will have already fully repaid by this point. Repayment terms and interest rates are frozen until 2021.
How do I apply for a Masters loan?
You must complete an application form and submit it to Student Finance England (SFE), with the quickest way of doing this being via GOV.UK Postgraduate Loans. There will also be an offline method, with further details to follow.
Applications open from late June 2016 but, as ever, it's advisable to apply as early as possible. There is a deadline for applications, but it's quite relaxed - you must apply within nine months of the start date of either the first or second year of your Masters.
You don't need to have even applied for your course before applying for the Masters loan - and can change any details later if necessary. However, payments won't begin before your registration is confirmed. To apply, you'll need:
- your passport;
- your National Insurance (NI) number;
- details of the course you want to study;
- details of your bank account;
- to decide how much you want to borrow, up to £10,000.
After submitting your application, you'll need to print and sign a student declaration form and return it to SFE. This confirms that you meet eligibility criteria and all of the information that you've provided is correct. You'll then receive a letter rejecting or approving your application, though in some cases may be asked to provide additional evidence before this stage.
As well as your programme details, you can also change the amount that you want to borrow at any point up to one month before the end of its payment period.
What are PhD loans?
Student loans for PhD programmes, of up to £25,000, will be introduced from 2018/19. They will be available to English students without full Research Council funding, studying at any university in the UK.
For more information, see PhD loans.
The essential guide to postgraduate funding
Discover alternative sources of funding from Research Councils to bank loans and employer sponsorship. Start your funding search with our A-Z of institutions and charities.
Find out more
- If you're a Northern Irish student discover how postgraduate loans in Northern Ireland can help with tuition costs of taught courses.