Postgraduate Bank Loans for Masters Degrees - A Guide

Students looking to start a Masters course in the UK can receive postgraduate bank loans that range from £5,000 - £100,000 depending on your course, nationality and other eligibility criteria. These loans are provided by commercial lenders rather than government student finances.

So, you’re diving into a Masters and wondering how to fund it? You're not alone. I've been there, sifting through the maze of postgraduate bank loans - who can get them, who offers them, and weighing them against UK student loans. If you're pondering whether a bank loan is the way to go for your Masters, I'm here to lay it all out, clear and simple. Let's navigate this together and figure out the best way to finance your next big leap.

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.

Bank loans for Masters students often consider your course and financial history to determine eligibility and loan amounts. In a sense, they view you as an investment, expecting to profit from the interest charged. Remember, these are commercial loans, distinct from government postgraduate loans, so tread carefully.

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 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

Most lenders accept loan applications from students over 18 pursuing a Masters or other postgraduate courses without strict age or qualification limits unlike UK student finance. However, they'll assess various factors to decide on the loan amount, interest rate, and repayment terms.

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.

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.

Postgraduate bank loans differ significantly from government loans that are available. UK student finance is available to students from England, Wales, Scotland, and Northern Ireland, based on eligibility. Consider a government student loan first but explore private loans for additional Masters funding or if ineligible for standard loans.

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

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
• Support for more expensive courses
• Broader eligibility criteria
• Fixed interest

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

• Strict repayment deadlines
• Affordability
• Credit impact
• Risk

1. Build Your Credit Score: If you're planning to apply for a private loan, a good credit score can significantly affect your interest rate. Pay bills on time and reduce your debt to improve your score.
2. Read the Fine Print: Look out for any additional fees, penalties for early repayment, or clauses that could affect your finances.
3. Seek Financial Advice: If you're unsure about the best option for you, seek advice from a financial advisor. They can help you understand the implications of taking out a loan and guide you towards the best decision for your circumstances.

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