Managing your money while studying can be a challenge, but understanding how student finance and tax work can make things a lot easier. Whether you’re just starting college or planning your university journey, it’s important to know what support is available and how your income might be affected.
Student Finance – What’s Available?
Student finance refers to the financial support you may be eligible for during your studies. This usually includes:
1. Tuition Fee Loan
Covers the cost of your university or college course and is paid directly to the institution. You don’t have to pay it back until you’ve finished studying and earn over a certain income threshold.
2. Maintenance Loan
Helps with living costs like rent, food, travel and books. The amount you can get depends on factors such as your household income and where you live and study.
3. Additional Support
There may be extra help available if you have a disability, children, or dependants. This could include:
- Disabled Students’ Allowance (DSA)
- Childcare Grant
- Adult Dependants’ Grant
Each UK nation (England, Scotland, Wales and Northern Ireland) has its own student finance system, so it’s important to apply through the correct student finance body.
Repaying Student Loans
You won’t start repaying your loan until after you’ve left your course and are earning above a certain amount. Repayments are taken automatically from your wages, much like tax and National Insurance, and the amount you repay depends on your income, not the size of your loan.
If your income drops below the repayment threshold, your repayments will stop. After a set number of years, any unpaid loan is usually written off.
Tax and Students
Most full-time students don’t pay income tax on their student finance loans or grants. However, you may need to pay tax if:
- You have a part-time job alongside your studies.
- You earn over the personal tax-free allowance (set by HMRC).
- You’re self-employed or doing freelance work.
If you work during term time or in the holidays, your employer will deduct tax and National Insurance through PAYE if you earn above the relevant thresholds. You can claim a refund if you’ve paid too much tax – this is common with temporary or seasonal jobs.
Other Things to Keep in Mind
- Open a student bank account to access features like interest-free overdrafts.
- Budgeting is key – track your spending and avoid unnecessary debt.
- Check your eligibility for bursaries or scholarships from your college or university.
- Always inform HMRC if you’re self-employed or doing freelance work, even as a student.
This guide offers a general outline to help you understand the basics of student finance and tax. For full, up-to-date advice, it’s best to visit the official government websites or speak to your college or university’s student support services.