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

Masters study is a step up in intesnity from your undergrad. That's no secret. But what are the differences in terms of funding?

It’s definitely worth getting clued up on the main differences between the undergrad and postgrad student finance systems – there are several key contrasts that might catch you out if you’re looking into a Masters loan for the first time. That’s where this blog should be useful. We've focussed on the English postgraduate loans but made sure to say when things work differently in other parts of the UK.

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

You'll be able to borrow up to £12,858 with a Masters loan from Student Finance England in 2025-26 (quite a bit more than you can get for undergraduate fees).

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

There's a catch though. . .

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.

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.

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).

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.

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).

This is where things become a little more complicated – I’ll do my best to keep it (relatively) simple.

The repayment threshold for English and Welsh postgraduate finance is 6% of your income above £21,000 per year. By contrast, the repayment threshold for English and Welsh undergraduate student finance is currently 9% of your income over £2,172 per month.

The interest rate for English and Welsh Masters loans are 7.3% and 7.8% respectively.

Scotland and Northern Ireland Masters loans both follow the same repayment terms as their undergraduate equivalents (Plan 4 and Plan 1, respectively).

All postgraduate loans are written off after 30 years (or 25 years, for Northern Ireland). From September 2023, this period increased to 40 years for undergraduate student finance in England and Wales.

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 probably 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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