But how much will a postgraduate loan cost you in the long run? What will repayments be, and how do they work if you already have a student loan?
We've updated this guide with examples and a handy calculator to help work out your own postgraduate loan repayments.
These resources cover all four UK postgraduate loan schemes. We've explained repayments for English-resident students (and EU students studying in England). But we've also covered the other UK Masters loans being introduced in Scotland, Wales and Northern Ireland.
Postgraduate loans work very similarly to undergraduate loans.
You will be borrowing money from Government to pay for your Masters. This must be repaid after you graduate, but terms are designed to make sure this process is always manageable.
In order to do this, student loans work differently to 'commercial' loans (from banks, or other lenders).
Repayments for all UK postgraduate loans are subject to the following conditions:
Some more specific repayment details differ for individual schemes. This table provides a simple comparison:
|England||£21,000||6%||RPI+3%||Separate||After 30 years|
|Wales||£21,000||6%*||RPI+3%||Separate||After 30 years|
|Scotland||£17,775||9%||1.25%**||Combined||After 35 years|
|Northern Ireland||£17,775||9%||1.25%||Combined||After 25 years|
*6% is the planned repayment rate for Welsh postgraduate loan repayments, but this is pending legislation. In the meantime, loans are advertised with a rate of 9%. We've used the intended percentage throughout this page, on the basis that this is the rate most students are likely to pay after they graduate.
**Postgraduate loans in Scotland and Northern Ireland use the same 'Plan 1' student loan repayment system as their undergraduate loans. If you have both undergraduate and postgraduate loans under these systems, your debts will be combined.
This information is based on current guidelines issued by UK student finance organisations. For more information on the way individual loan schemes work, check out our full guides.
You can also jump to the list of frequently asked questions (FAQs) at the end of this page, if you have a more specific query about postgraduate loan repayments.
Knowing how postgraduate loan repayments work is all very well, but we expect you'll want to know what your repayments will be.
The simplest way to find out is with our new Postgraduate Loans Calculator.
To check your repayment amount, simply select the country you'll be receiving a postgraduate loan from and input your salary. The calculator will then work out what your repayments will be each month:
Our calculator works out your postgraduate loan repayments by subtracting the repayment threshold for your loan from your suggested salary. This gives the amount of earnings you will make repayments on.
The calculator then uses the repayment rate (%) for your loan to work out how much you will have to repay in a year.
Finally, it divides this amount by 12 to give the typical monthly repayment amount that would be automatically deducted from your salary by HMRC.
Please note that the results given by our calculator are meant as a guideline only. Details of repayment rates and thresholds may be changed.
We recommend you double check the details of your postgraduate loan before making repayment assumptions. You can find further details for each UK loan scheme below.
You should also remember that the calculator only gives postgraduate loan deductions.
Students for applying for an English or Welsh postgraduate loan will also need to make repayments towards any undergraduate loans they may have. (The Scottish and Northern Irish loans combine undergraduate and postgraduate debt).
Finally, the information for Welsh postgraduate loans is based on the intended repayment rate of 6%. This is pending legislation. In the meantime, the officially quoted rate for a Welsh postgraduate loan is 9%. To keep things simple, we've based our calculator on the rate students are most likely to pay when they actually begin repaying their loans.
Will a postgraduate loan help you pursue a Masters? Browse and compare Masters degrees in the UK on FindAMasters.com
The last question to answer (before our FAQ, at least) is probably the most important: what impact will a postgraduate loan actually have on your salary?
Individually, postgraduate loan deductions are likely to be quite small. But that's not the whole story.
If you're working in the UK and earning enough to repay a postgraduate loan, you'll also be paying income tax and National Insurance.
These are currently deducted at the following rates:
These will be taken from your monthly salary automatically. Crucially, they're also based on your gross (total) earnings. That means that individual deductions don't lower the amount of salary you make other deductions on.
If you've studied a UK Bachelors degree before your Masters, you may already have an undergraduate student loan. You'll repay this along with your postgraduate loan, but the way these repayments work will depend on the loan you apply for:
So, how does this all work in practice? To help give you an idea we've worked out what the actual salary deductions might look like for Masters graduates with different loans.
English and Welsh Masters loans are repaid at 6% of income over £21,000 a year. Undergraduate loans are repaid at 9% of income over £21,000 a year.
If you are a UK taxpayer with an undergraduate and postgraduate loan from England or Wales, your salary deductions would look like something this:
|Income||Monthly||Tax||NI||UG Loan||PG Loan||Remainder|
These are approximate values, offered as a guideline only. They are based on the latest information from Student Finance England and Student Finance Wales, as well as current income tax and National Insurance rates. Other deductions could also be made from your salary, according to your financial circumstances.
As you can see, repayments for your postgraduate loan are comparatively small. However, they do add up with other salary deductions - including your existing student loan (if you have one).
Scottish and Northern Irish postgraduate loans are repaid at 9% of income over £17,775. Undergraduate and postgraduate debt is combined: students with two loans make a single monthly repayment.
If you are a UK taxpayer with an undergraduate and / or postgraduate loan from Scotland or Northern Ireland, your salary deductions would look something like this:
These are approximate values, offered as a guideline only. They are based on the latest information from Student Awards Agency Scotland and Student Finance Northern Ireland, as well as current income tax and National Insurance rates. Other deductions could also be made from your salary, according to your financial circumstances.
At lower incomes, repayments for Scottish and Northern Irish loans will be higher than those for English and Welsh loans. This is due to their lower repayment thresholds and higher repayment rate (9% of income over £17,775, rather than 6% of income over £21,000).
This is eventually reversed, however, by the effect of combining undergraduate and postgraduate debt into a single repayment.
Got an additional question about repaying your Masters loan? We've answered some common queries about repayment processes, terms and conditions.
No. The UK Government will be increasing the repayment threshold for English undergraduate loans to £25,000 in April 2018.
However, this doesn't apply to postgraduate loans. You'll still repay your Masters loan at 6% of income over £21,000 per year.
You will be eligible to make postgraduate repayments from the April after your course finishes, but will only do so when you are earning over the threshold.
Repayments will only ever be taken whilst you are earning over your threshold. The way this happens will depend on the kind of work you do:
However you pay, you will receive an annual statement of your loan balance. This will record your repayments and interest.
No. This is a common misconception about student loan repayments, but it has the potential to be quite alarming.
Your postgraduate (and undergraduate) loan repayments will only ever be taken from the income you earn over your threshold.
For example: if you earn £25,000 in one year and have an English postgraduate loan, you will be eligible to make repayments during that year. This is because £25,000 is above your repayment threshold of £21,000.
However, you will only repay 6% of £4,000 (your income over £21,000) not 6% of £25,000 (your full salary). This is the difference between repaying £20 a month or repaying £105 a month - quite significant!
Repayments are calculated based on your total (gross) earnings, before any income tax (or National Insurance) is deducted.
For example: if you earned an annual salary of £23,000, you would pay £2,300 in income tax for that year (20% if your income over £11,500). This would leave you with £20,700 (before other deductions were made).
£20,700 is below the postgraduate loan repayment threshold in England and Wales (£21,000), but that doesn't matter: your postgraduate loan repayments will be calculated based on your gross income, before tax.
In this scenario you would repay £120 over the year for your postgraduate loan (6% of the £2,000 you earned over the £21,000 repayment threshold) as well as £2,300 in income tax. You would also make National Insurance payments (and undergraduate loan repayments) based on your total income.
You will be due to make repayments whenever you earn over the threshold in a given repayment period. This means that overtime, a bonus or additional temporary work could make you eligible for repayments in a particular month, even if your regular earnings are below your threshold.
For example: if you had an English postgraduate loan and earned £20,000 a year, you would not normally make monthly repayments. Your monthly salary would be approximately £1,666. This is below the monthly repayment threshold of £1,705 (the monthly equivalent of £21,000).
But, if you earned worked overtime in that month and made an extra £200, you would make a postgraduate loan repayment. This is because your total monthly earnings would now be £1,866. In this scenario your employer would deduct £9 for your loan (6% of £161 - your earnings above the monthly threshold).
Assuming your earnings returned to normal next month, you would not make a further postgraduate loan repayment.
HMRC will not be able to take automatic postgraduate loan repayments from outside the UK. However, you must still repay your loan when you are eligible to do so.
You must notify your postgraduate loan provider if you will be living outside the UK for more than three months. They will help you assess the repayments you need to make and provide a means of doing so.
You will be eligible to repay any postgraduate loan you have received, even if you drop out of your Masters or fail to earn your degree.
If this happens it is important that you notify your student finance provider. If you do not do so, any further (incorrect) payments to you may be regarded as overpayments. Repayment of these extra amounts may not be income-contingent (and may be expected more promptly as a result).
Because repayments are income-contingent, they should always be affordable. You will only repay your loan when you are earning enough to do so.
Yes. If you wish to pay off your postgraduate loan sooner, you can make extra payments towards your balance. These could be one-off contributions, a monthly plan, or a repayment of your balance in full.
Note that these payments will be made on top of your income-contingent deductions. In some cases they may also incur small administrative charges.
Postgraduate loans are provided on the assumption that students will earn enough to repay their loans. The UK Government believes that Masters-level qualifications will boost graduates' employability and earnings, meaning that loans are a worthwhile investment.
However, postgraduate loan debt will expire after a certain period of time. This is currently 30 years for English and Welsh loans, 35 years for Scottish loans and 25 years for Northern Irish loans.
Normally, you won't need to worry about missing postgraduate loan repayments. The income-contingent system means they are taken automatically whenever you are earning enough.
However, it's possible that you could miss payments if you receive undeclared income, in the UK or abroad. If this is the case you should contact your loan provider to avoid entering arrears.
This page should hopefully make it easier to understand how postgraduate repayments work - and what their effect could be on your future salary.
It’s absolutely right to think carefully and responsibly about any loan commitments, for any purpose. Hopefully this information helps you make the decision about whether a postgraduate loan is right for you.
Please note that the resources on this page are provided in good faith, based on current information on postgraduate loan repayments.
We recommend that you check the latest guidelines from UK postgraduate loan providers:
Will a postgraduate loan help you pursue a Masters? Browse and compare Masters degrees in the UK on FindAMasters.com
Last updated - 20/10/2017