How much does university really cost? A complete guide

Student loans: your questions answered

How much does university cost?

Students going to university in England in the upcoming academic year will pay annual tuition fees of £9,250, adding up to £27,750 for a three-year course.

Those studying in Scotland and Northern Ireland will pay £9,250 — apart from Scottish nationals who pay no tuition fees in Scotland or Northern Irish residents who pay a reduced £4,395 if studying there. Tuition fees in Wales are limited to £9,000.

Tuition fees are paid directly to the university and purely cover the cost of your degree and course. They do not include any academic extras you might need to support your studies such as a laptop, stationery or living expenses.

Students will also need to budget for everyday costs including food, transport and social spending — most will be eligible for a maintenance loan to help towards these costs, covered in more detail below.

The average university student spends £116 a month on groceries — equal to £1,392 a year, although this might be lower if students go home during the holidays. Students typically spend £59 each month on going out and £54 on transport, according to a survey of 2,000 by website Save the Student.

It found the average student typically spent £924 in total on living costs each month, covering everything from rent to clothes and events to takeaways.

● Student loan debt reaches record £205bn
● Apply now to get your student loan

What does student accommodation cost?

By far the biggest living expense at university is rent. There are two main types of accommodation available to students: purpose-built blocks, and private houses and flats.

Students typically live in halls or private student blocks in or around campus in their first year, before moving into a shared property renting from a smaller landlord in their second and third years of studying.

There is a national shortage of affordable accommodation and rents are out of kilter with maintenance loans available to students. The average rent for purpose-built student accommodation rose to £7,374 a year in 2021/22 — up £309 on the year before, according to the latest figures from Unipol Student Homes and the National Union of Students.

In London the average annual rent rises to £9,488. You can apply for a bigger maintenance loan if you study in the capital to help with higher living costs.

Whether you secure a room in halls owned by your university or a student block owned by a private company will make a big difference to price. On average a room in privately owned purpose-built student accommodation is £1,505 more expensive a year than university-owned accommodation.

How do student loans work?

All full-time undergraduate students are entitled to student finance, provided they are a UK national, have settled status or have been living in the country for three years in a row before the first day of the first academic year. Typically students can only qualify for student finance if they are studying for their first higher education qualification — although limited funding is available outside of this criteria.

Loans are available to cover the full cost of tuition fees and are paid directly to the university, although you must first apply online.

Undergraduates can also apply for a maintenance loan to help cover living costs at university, such as rent, food and books. There is no set loan amount and what you are entitled to will depend on your parents’ income and where you will study.

The size of the maintenance loan ranges on a sliding scale from £4,651 to £9,978 per year for students living away from home in England and outside London, while those studying in the capital can access a loan of between £6,485 and £13,022 per year.

Different loans and grants apply in Wales, Scotland and Northern Ireland depending on where you live and study. Welsh students receive a grant for living costs on top of their maintenance loan, which does not need to be repaid, but the amount depends on how much their parents earn.

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What is changing for students this year?

Graduates used to have 30 years after leaving university to pay off their student debt before the government wrote it off completely, regardless of how much had been repaid. However, the deadline for repaying student loans has increased to 40 years from this academic year.

The earnings threshold for repayment will also fall to £25,000, so a graduate earning £30,000 would be £5,000 above the threshold and will repay 9 per cent of that, equal to £450 a year or £37.50 a month.

The changes mean many borrowers will still be paying off their student loan when they approach retirement and their own children (or even grandchildren) are saddled with university debt.

● Labour vows to cut student loan repayments without spending a penny

How much will a student loan cost me?

The longer the debt remains unpaid, the more interest it will accrue. Interest is applied to the previously accrued interest and the size of the loan can snowball.

To give you an idea of how student loans can balloon over the course of your working life, assume you are a graduate with £50,000 of debt and a starting salary of £35,000 when you leave university. Assume you repay the loan over 40 years, over which time you get a 3 per cent pay rise each year and interest is accrued at 3 per cent inflation. By the time you pay it off you will have repaid a total of £102,852.

A higher earner with a starting salary of £55,000 would repay £67,269 to the government to clear their student debts — they repay less because their higher salary meant they cleared the loan more quickly, with less time for interest to accrue.

However, a graduate with a lower starting salary of £25,000 is unlikely to ever repay the loan in full. Over the course of 40 years they would repay only £36,120 of the initial £50,000 debt before it was written off, according to analysis by the investment platform AJ Bell.

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Can I get a student grant?

Some undergraduates will be eligible for a grant, bursary or scholarship and, unlike tuition and maintenance loans, these do not need to be repaid. They are offered by different providers including universities, employers, charities and even public figures, so there is no universal application process or funding.

Eligibility varies depending on the type of funding, but additional support can be offered to low-income households, disabled students or those in care. Others are academically focused and offer extra funds based on grades or talent in subjects like sport and arts.

It is worth researching any grant, bursary or scholarship you may be eligible for and the deadline for applications — because they do not need to be repaid, they can make a real difference to your university experience and your debt levels after graduation.

Beware funding shortfalls

Even if you secure a student loan, it is unlikely to cover your full costs at university. While tuition fees are set, the soaring cost of living has meant students increasingly need to find extra funds to afford university life.

Even students who qualify for the most generous means-tested maintenance loan face an average shortfall in funding of £5,000 per year, according to research by High Fliers Research, which specialises in graduate recruitment.

The shortfall rises to £10,000 to £12,000 a year for students who can access only the minimum level of maintenance loans.

It is worth having an open conversation with your parents, guardian or tutor about how you might cover any extra costs while studying. This might include a part-time job, agreeing financial support with a family member or strict budgeting.

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Bank accounts and freebies

Banks offer student bank accounts that come with perks such as cash, shopping discounts and interest-free overdrafts.

Before you sign up, think about what your priorities are. If you’re worried about overspending, prioritise accounts with a generous overdraft arrangement. Banks including Nationwide and HSBC offer interest-free overdrafts of up to £1,000 in the first year, £2,000 in year two and £3,000 in your third year, for example.

Tom Allingham from the money advice website Save the Student says: “Overdrafts are arguably the safest and most easily accessible source of extra cash for students, and given the generous repayment terms even after you graduate, it’s something every student should consider applying for — even just as a safety net.”

Some banks also offer free cash perks when students sign up, such as NatWest and HSBC, which are both offering £100. Santander is offering a free four-year 16-25 Railcard, which means you get a third off train tickets, so do the maths and see whether the savings you’ll make are more than the £100 bonus offered elsewhere. However, don’t be swayed solely by the freebies.

How much will I earn as a graduate?

Your earning potential as a graduate will ultimately depend on your choice of course and results.

Salaries vary greatly between industries. A graduate who studied medicine and dentistry can expect an average annual salary of almost £53,000 after five years in the job market, according to official figures from the Department of Education.

But graduates who studied performing arts will have less than half the earning potential, with an average salary of £21,200 five years after leaving university. You can learn more about the degrees which lead to the highest salaries here.

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