Postgraduate loans

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Government-backed Masters loans of up to £10,000 will be introduced from September 2016 - a ground-breaking move for postgraduate education in the UK

The chancellor, George Osborne, confirmed the new loans system in his November 2015 spending review, revising several aspects of the earlier proposals following a public consultation.

Here are the key questions answered...

Is my programme eligible for a Masters loan?

Full-time taught and research Masters of all subjects, disciplines and qualifications - including MA, MSc and MBA - are covered, providing that they last no longer than two years. Part-time and distance learning courses are also eligible, providing that they're studied at an intensity of at least 50% of their equivalent full-time counterpart (i.e. lasting no longer than four years).

While Masters of Research (MRes) programmes are eligible, PhDs will be covered by separately proposed research loans - as outlined below. Other qualifications that aren't covered include the Postgraduate Certificate (PgCert), Postgraduate Diploma (PgDip) and four-year undergraduate Masters - though students of the latter will usually receive the undergraduate loan regardless.

The Postgraduate Certificate in Education (PGCE) is also ineligible, though financial support for teacher training is widely available through the Department for Education.

Am I eligible for a Masters loan?

Students must:

  • be aged under 60 when they begin the course;
  • be studying at any university with degree awarding powers in England, Scotland, Wales or Northern Ireland;
  • have lived in England for at least three years, though some exceptions may apply (see below);
  • not have studied a Masters degree or PhD before.

Loans are intended for English students. However, Scottish, Welsh or Northern Irish students are also eligible - providing that they've lived in England for at least three years for a reason other than study.

European Union (EU) students are eligible if they’ve been resident in the EU for at least three years for a reason other than study. Non-EU students are not eligible for the loan, unless they have the right to reside permanently in the UK; due to having refugee status, for example.

Entitlement to Disabled Students' Allowances (DSAs) will remain distinct from Masters loans or any other financial support that you receive, meaning that you can still claim DSA.

How will I receive my Masters loan?

Loans are worth a maximum of £10,000; this means that they completely cover the cost of tuition fees for most courses, given that the average programme costs around £8,000. The notable exception is the MBA, which usually costs much more.

However, students are under no obligation to spend the loan on tuition fees; it can also be used for living costs or other study expenses. Students that receive other grants or finance will still be eligible for the Masters loan, but taking out the Masters loan may affect their eligibility for other grants or finance.

The loan will be paid directly to students by the Student Loans Company in three instalments per year, meaning that:

  • students on one-year, full-time programmes may receive up to £10,000 in three instalments;
  • students on two-year programmes may receive up to £5,000 each year, in three instalments per year;
  • students on three or four-year, part-time programmes may receive up to £5,000 in each of their first two years of study, in three instalments per year.

Payments begin once the student's attendance is confirmed by the university. Loan instalments will stop if the student leaves the programme early or transfers to a different course that isn't eligible for the Masters loan. What's more, the money that has already been borrowed must be repaid.

How will I repay my Masters loan?

Loans will be repaid concurrently with the undergraduate loan, on an income-contingent basis at a rate of 6% on earnings over £21,000. Repayments will not begin for any student until 2019, but voluntary early repayments can be made. After 2019, students will repay the loan from the April after they graduate.

Interest rates are set at Retail Prices Index (RPI) + 3%. This means that the interest charged will be the current RPI percentage, plus an additional 3% - a favourable market rate. Interest will begin accruing as soon as the first payment is made to the student by the Student Loans Company.

All student debt will be cancelled after 30 years, but most graduates will have already fully repaid by this point. Repayment terms and interest rates are frozen until 2021.

How do I apply for a Masters loan?

Application processes haven't yet been finalised, but applications will likely be made online through Student Finance England.

Loans will be available from the 2016/17 academic year. Courses beginning before September 2016 are therefore ineligible, but the eligibility of programmes in future years is unaffected by the point of the year at which they start.

What are research loans?

Plans for a separate loans system for Doctoral students have also been proposed. These are subject to consultation.

Under current plans, loans of up to £25,000 will be available - in addition to existing forms of financial support such as scholarships and bursaries and Research Council grants. However, it's unclear at the moment whether this amount will vary between programmes of different lengths.

It's also unclear as to whether all disciplines will be covered, or just science, technology, engineering and mathematics (STEM) subjects. Eligibility criteria, including nationality and residency requirements, are unconfirmed.

Research loans are unlikely to be available until 2017/18 at the earliest - but, as ever, it's worth keeping up to date with proceedings.