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 by Mark Bennett
, posted on 2 Oct '19

Postgrad Loans vs Undergrad Loans – What's the Difference?

Student loans are available for Masters degrees across the UK, but they aren't quite the same as the student finance you might be used to from your undergrad studies – and some of the changes are pretty important.

Here are seven things that might catch you out if you aren't prepared. We've focussed on the English postgraduate loans but made sure to say when things work differently in other parts of the UK.

#1 You can borrow 'more'

First thing's first, the postgraduate loan is worth more than the undergraduate tuition fee loan:

You'll be able to borrow up to £11,222 with a Masters loan from Student Finance England next year (quite a bit more than the £9,250 you can get for undergraduate fees).

Postgraduate finance is also more generous in Wales, Northern Ireland and Scotland.

There's a catch though. . .

#2 Postgrad loans aren't linked to fees (and won't always cover them)

Undergraduate student finance is directly linked to the cost of tuition fees (that's why students from other parts of the UK can usually borrow more to study in England, where university fees are highest).

Postgraduate loans don't work like that. The loan amounts aren't based on the fees for actual degrees as the cost of a Masters varies between courses and universities. Instead they're just the maximum contribution you can get.

You might be lucky and have some money left over for living costs (more on that in a moment). Or you might need to find some additional funding to cover your fees.

#3 There isn't any postgrad maintenance loan

Postgraduate student finance in England and Wales is just an overall contribution to the cost of your Masters. The money gets paid into your bank account, in instalments, and you can use it for fees and / or living costs – it's up to you. In Northern Ireland the loans are just for tuition fees (and get paid straight to your university).

The exception is Scotland, where part of the loan is specifically set aside for living costs.

#4 You don't have to re-apply each year

Full-time Masters degrees are usually between one and two years long, but you normally only need to apply once for your postgraduate loan and it will be split evenly across your full degree.

The exception this time is Northern Ireland, where you do need to re-apply in the second year of your course (and in the third year, if you're part-time).

#5 There's an age limit

You'll need to be under 60 at the start of your course to apply for a postgrad loan in England and Wales or to get the living cost portion of a Scottish loan (don't worry: you're allowed to get older during your course). This is different to undergraduate loans where students over 60 can still borrow a lower amount.

Northern Ireland is an exception again, with no age limit for its postgraduate loans.

#6 You don't get any extra money to study abroad

You can study part of your Masters outside the UK with a postgraduate loan, provided this doesn't account for more than 50% of your course. However, you don't get any extra student finance to do so (sorry).

#7 Repayments and interest are different too

Actually, if you're a Scottish or Northern Irish student, repayments and interest are exactly the same for undergraduate and postgraduate loans. It's basically the same 'Plan 1' loan and you're just borrowing more for postgrad study.

Things are different in England and Wales though:

  • Repayments for postgraduate loans begin once you're earning the equivalent of £21,000 per year (not the current £25,725 a year for an undergraduate loan) and this threshold doesn't change with inflation
  • Interest rates for postgraduate loans are always the same, regardless of whether or not you're studying and how much you earn – the current rate is 5.4%, but this does change each year

All postgraduate loans are written off after 30 years (or 25 years, for Northern Ireland).

So. . .

To put it simply, postgraduate loans let you borrow more than undergraduate loans, but they aren't guaranteed to cover all of your costs. You'll probaby also begin repaying your loan sooner.

These differences do matter (as you can see) but hopefully we've managed to explain them clearly. You can check out our full guides to each of the UK postgraduate loans for more information (and the most extensive set of FAQs anywhere on the internet).

The loans do tend to change each year, too. Our free newsletter is also the best way to stay up to date.

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