Postgraduate Bank Loans for Masters Degrees - A Guide |

Postgraduate Bank Loans for Masters Degrees

Written by Mark Bennett

Some banks and other lenders offer private student loans for Masters degrees or other postgraduate courses. Postgraduate bank loans are different to the postgraduate student loans provided by the UK Government. They are offered based on your financial circumstances and will usually need to be repaid in set instalments within a specific period.

This page explains how personal loans for postgraduate study typically work and provides some information on UK lenders that currently offer them. The information here is not offered as financial advice and we don’t endorse or recommend any individual lenders or products.

On this page

What are postgraduate bank loans?

Postgraduate bank loans are private student loans offered by commercial lenders rather than government student finance agencies. Unlike other personal loans they are designed specifically for students studying Masters degrees or similar courses.

Lenders assume that your postgraduate degree will improve your future earnings and career prospects, allowing you to repay the money they lend you to help with tuition fees and living costs.

Most of these bank loans for Masters students take into account the course you are studying as well as your financial background. They use this information to set their eligibility criteria and to decide how much they will lend you.

In a sense, these loans represent an investment in your potential as a postgraduate student. However, this is a commercial investment and lenders will expect to generate profit through the interest they charge you. It’s very important not to confuse private student loans with government postgraduate loans.

Using this guide

This page gives a general overview of how private student loans work for postgraduate degrees. We hope it helps you make sense of this option, but we can’t offer a comprehensive guide to every loan product out there. You should check with specific lenders – and make sure you consider other funding as well.

How much could I borrow?

Most private loans will allow you to borrow more than a UK postgraduate loan (currently £12,167 for English-resident students). Some offer maximum loans of £100,000 or more, making them suitable for more expensive postgraduate courses such as MBAs or postgraduate Law degrees.

In most cases the amount you can borrow will be based on your circumstances. Lenders will consider how affordable they think your repayments will be (based on factors such as potential future earnings for your course). They will then offer a loan amount and interest rate tailored to you.

Some postgraduate bank loans are also linked to your tuition fees: you may only be able to borrow what your course costs, or the amount you can borrow specifically for living costs may be capped.

How will the money be paid?

Money for tuition fees will be paid directly to your university; money for living costs will be paid to you in regular instalments.

What will the interest rate be like?

Lenders are free to set their own rates (just as they are for other personal loans). What makes personal loans for postgraduate study different is that the course you are studying will help determine how ‘risky’ your loan is perceived to be and, therefore, how high your interest rate is.

You will usually be given your personal interest rate as part of your loan offer. This may be fixed for the duration of your loan, or it may vary.

Can I check the APR?

Some lenders will provide a representative APR for their loans. Others will wait to calculate an actual APR as part of your loan offer.

What is APR?

Annual Percentage Rate (APR) is a simplified way of predicting the cost of a loan. It takes into account your interest rate plus any other charges. APR is given as the percentage of the amount borrowed that will be added to your debt each year. So, if you borrow £1,000 and have an APR of 10% your loan will be costing you £100 a year.

You should make sure you understand the cost of any loan you take out for a postgraduate degree. Your lender should be able to provide clear information about its payments. You can also check other sources of advice.

What sort of repayment terms will be offered?

Repayment terms for private student loans are very different from government postgraduate loans. They won’t be income-contingent (linked to your earnings). Instead you will have to repay a minimum amount each month for a set period. You will also be expected to repay your loan in full (your debt will not be cancelled after a set time like a government loan).

Actual terms will be set by each lender. Some will start taking repayments as soon as you receive your loan; others may offer reduced repayments whilst you study and / or a ‘grace period’ while you look for work.

What postgraduate bank loans aren’t

Before moving on to eligibility, it’s important to be very clear about what this page covers and ensure you don’t confuse these loans with other types of funding:

  • Postgraduate bank loans aren’t government postgraduate loans – you can read about the differences between these two loan types below
  • Postgraduate bank loans aren’t Career Development Loans – the Professional and Career Development Loan scheme ended in January 2019. It was offered in partnership with some banks, but was set up by the UK Government.
  • Postgraduate bank loans aren’t student payday loans – Some lenders offer short-term ‘payday’ loans at very high interest rates for students trying to bridge funding during a course. The loans on this page are usually applied for before you start your Masters and offered on more affordable terms.
  • Postgraduate bank loans aren’t graduate loans – Some UK high street banks offer general loans for university graduates. The loans on this page are specifically for funding postgraduate courses.

You can read about other types of postgraduate funding elsewhere on our site.

Who can apply for a postgraduate bank loan?

Most lenders will consider applications from all students aged over 18 studying a Masters degree or other postgraduate course. Unlike UK student finance they won’t set hard restrictions on upper age limits or existing qualifications.

However, commercial funders will also consider a range of other factors when deciding whether to offer you a loan. This information will also be used to determine how much you can borrow and what your interest rate and repayment terms will be.

Each postgraduate lender will set its own criteria and weight them differently, but they are likely to include some or all of the following:

  • Credit score and / or credit history – This helps check that you have a good track record of repaying debts and can afford a loan
  • Other financial circumstances – Lenders may use other criteria such as your current savings or assets to assess the affordability of your loan
  • University and / or course quality – Rankings for your institution or department may be used to assess the potential for your degree
  • Course duration and / or continuation rate – The time students typically take to complete your course (and whether they do) may help a lender confirm that you will graduate and repay as expected
  • Future earnings and / or employability – Historical data for your course or subject may be used to predict your future economic prospects
  • Employment and / or academic history – Lenders may consider your existing work experience and qualifications when deciding how quickly you will find work with your Masters

Most lenders use their own algorithms to quickly process this information when you ask for a quote.

Are loans available for international students?

Private educational loans for graduate students don’t usually restrict eligibility to UK or EU students, though some lenders may have their own nationality criteria.

Will applying for a loan affect my credit rating?

Getting a quote for a loan may not show up on your credit history but making an application usually will. You should check this in advance if you aren’t sure.

Can I still apply if I have a bad credit score?

Private postgraduate loans will take account of your credit rating (this makes them different from government postgraduate loans). However, a poor credit score can sometimes be offset by other factors such as the reputation and future earnings potential for your course.

Can I apply for a postgraduate bank loan if I already hold a Masters qualification?

Yes. One of the main eligibility requirements for the UK government's Masters loans is that the student is studying their first Masters-level qualification. This condition doesn't apply for postgrad bank loans, making them more suitable as a student loan for working professionals who may have already completed a Masters earlier in life.

Can I still apply if I don’t have any credit history?

Postgraduate lenders know that many students may not have had time to build up a credit history. They may offset this by paying more attention to course-related factors or allowing you to provide a guarantor (see below).

Will I need a guarantor?

A guarantor is someone (such as a family member) who agrees to take responsibility for your debt if you are unable to make future repayments. Some postgraduate lenders may ask you to provide a guarantor if you have a limited credit history.

Do I need an offer for my course before I can apply for a loan?

The terms for your loan will be partly based on the Masters degree or other course you are studying. You will therefore need to confirm that you have been accepted before your loan can be finalised. Each lender will have their own process for this.

Who provides postgraduate bank loans?

Various organisations offer private loans for Masters degrees and other postgraduate courses. Many have been set up to cater specifically for postgraduate students; others are established retail banks.

We can’t provide a comprehensive list of postgraduate lenders and their products, but what follows is a small selection to give you a sense of how these loans might work.

Please note

FindAMasters does not specifically endorse or recommend any lender or product mentioned on this page. You should check their websites for the most detailed and up-to-date information.

Lendwise postgraduate loans

Lendwise is a peer-to-peer lending service founded in 2018. They distribute funds from individual investors to students on postgraduate and professional courses:

  • Loan amount - £5,000-100,000
  • Basic eligibility – Loans are potentially available to students of all nationalities studying at UK universities and living in the UK
  • Eligibility criteria – Applications consider your credit score and history, plus your work experience, current salary and academic qualifications as well as the ranking, duration and mode of study for your course
  • Repayments – You will start repaying six months after you graduate

Prodigy Finance postgraduate loans

Prodigy Finance was founded in 2007 and offers private student loans using funds from approved investors. They focus on international students completing postgraduate courses in Business, Engineering, Law, Medicine and Public Policy:

  • Loan amount - a minimum of USD $15,000
  • Basic eligibility – Loans are potentially available to international students from 150 countries studying at selected universities; support may also be available for UK students studying in the UK and US students from certain states studying in the USA
  • Eligibility criteria – Applications consider your salary, credit score and savings; loans are only available for approved subjects and degrees
  • Repayments – Full-time students begin repaying 6 months after graduation; part-time students begin repaying 3 months after receiving their first loan payment

Danske Bank postgraduate loans

Danske Bank is a Danish retail bank founded in 1871. It offers postgraduate loans for tuition fees:

  • Loan amount - From £1,000 up to the maximum amount for your fees
  • Basic eligibility – Loans are designed for UK students on courses lasting up to three years
  • Eligibility criteria – Applications consider your credit score and financial history; a guarantor may be required
  • Repayments – You will make interest-only repayments for the first 30 months, then switch to repaying interest and capital; repayments must be made from a Danske Bank account

Can I use a credit card to pay for postgraduate study?

You can use a credit card to pay your Masters fees (most universities will accept payments in this way).

However, you should check the details for interest and repayments. Many credit cards offer low interest (or even 0% interest) for a fixed period, but rates may increase substantially after this. Make sure you have a plan for dealing with the repayments.

Can I get a ‘normal’ loan to pay for postgraduate study?

You can use a standard personal loan for your Masters fees or postgraduate living costs.

However, because they aren’t designed for students, these loans may have stricter eligibility criteria that don’t consider your course and focus much more on your credit score and history. Their repayment plans are also unlikely to take account of the time you spend studying.

You should also be very wary of which loans you consider. Short-term ‘payday’ loans are not suitable for students: their high interest rates mean that the amount you owe will have risen substantially before you graduate and earn enough to begin repayments.

Private Masters loans vs UK student loans

Postgraduate bank loans are very different from government postgraduate loans offered through official UK student finance agencies.

All students from England, Wales, Scotland and Northern Ireland have access to these ‘public loans’, subject to some eligibility criteria.

We think you should always consider a government student loan first, but you may wish to investigate private student loans if you need extra funding for your Masters, or if you aren’t eligible for a standard student loan.

The big differences

Here’s how bank loans compare to government loans:

  • Value – The upper limit for private loans will be a lot higher than a public loan, though the amount you can borrow will depend on your circumstances
  • Eligibility – Private loans aren’t usually restricted to UK and EU students and don’t have an upper age limit, but they will consider your credit rating and financial circumstances
  • Repayment system – Unlike the income-contingent system used for government student loans, repayments for private loans are not proportionate to your earnings and you will have to make them whether or not you are in work
  • Repayment deadline – Private loans will have a set repayment plan and your debt will not be cancelled after a certain period
  • Credit score – Unlike government student loans, applications for private student loans do show up on your credit history and failure to repay will affect your credit score

Government postgraduate loans

Students from all parts of the UK can access government student loans for Masters degrees and other postgraduate courses. You should learn more about these before considering private student loans.

Should I consider a bank loan for my Masters?

Private Masters loans can be an option if you aren’t eligible for UK student finance or if you need some extra funding for your course. However, it’s important to think carefully before taking out a commercial loan for your Masters.

Here are some advantages and disadvantages for you to consider:

The advantages

Postgraduate bank loans do have some advantages over more ‘traditional’ funding:

  • Topping up your funding – The reality is that a government postgraduate loan won’t always cover the full cost of a Masters. A small private loan can help you find the extra funding you need.
  • Support for more expensive courses – Some postgraduate degrees (such as MBAs) can be much more expensive than others. A private loan will usually go a lot further towards meeting this cost.
  • Broader eligibility criteria – Government loans are usually only available to UK or EU students, aged under 60 who will be studying a Masters (and don’t already have an equivalent qualification). Private loans can be available to a wider range of students, for a wider range of courses.
  • Fixed interest – Some (though not all) private loans may fix all or part of their interest rate when you apply. Interest on Government loans is linked to inflation and may not always be lower than a private loan.

The disadvantages

It’s no secret that relying on commercial finance has drawbacks that don’t apply to other postgraduate funding:

  • Strict repayment deadlines – Lenders will assume your course will improve your career and earnings, but you won’t have much (or any) protection if this doesn’t happen straight away. Repayments will still be due according to a fixed schedule.
  • Affordability – Even if you are working, the amount you need to repay for a private loan won’t be linked to your earnings in the same way as a government loan. You could find that the repayments are less affordable at lower incomes.
  • Credit impact – Taking a long time to repay a government student loan has no effect on your credit history. Failing to repay a private loan on time could significantly impact your credit score.
  • Risk – Your other assets (or your guarantor’s) may be at risk if you are unable to keep up with repayments.

Other funding and advice

Whatever your circumstances, private loans almost certainly aren’t your only means of paying for postgraduate study.

We provide detailed resources for other funding options, including government loans, university scholarships and funding from charities and trusts. We’ve also covered other topics such as crowdfunding a Masters and seeking support from your employer.

You can also sign up to our newsletter for regular and completely impartial advice and news about postgraduate funding.

Where to get financial advice

We can explain how different funding works, but we can’t offer financial advice. If you do need help or have a question about applying for a loan in your circumstances, we recommend you check the following services:

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Last updated: 15 November 2023