Lana Oconnell
Whether you need to pay for your Master's degree depends on your financial situation and your nationality and residency status. If you are a UK national or Irish citizen, or have settled status under the EU Settlement Scheme, you can apply for a Postgraduate Master's Loan. If you are an international student, you can take out a graduate student loan from private lenders or the federal government. If you already have student loans, you may be able to defer payments until after you graduate, depending on your loan type and lender.
| Characteristics | Values |
|---|---|
| Loan types | Federal or private |
| Federal loan benefits | Automatic in-school deferment, lower interest rates, lower fees, income-driven repayment |
| Private loan benefits | Higher interest rates, higher fees |
| Federal loan requirements | Filling out the Free Application for Federal Student Aid (FAFSA) |
| Private loan requirements | Proof of enrollment in a graduate program, income verification, personal identification |
| Loan repayment options | Standard repayment plan, graduated repayment plan |
| Average federal financial aid | $28,300 in grants, loans, and work-study programs |
| Private lender considerations | Interest rates, repayment terms, borrower benefits, eligibility criteria, credit requirements |
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What You'll Learn
Eligibility for a master's loan
To qualify for a Postgraduate Master's Loan, you must meet several eligibility criteria. Firstly, you must be a UK national, an Irish citizen, or have settled status under the EU Settlement Scheme or indefinite leave to remain. Secondly, you must be under 60 years of age on the first day of the first academic year of your course. The academic year is typically a 12-month period starting on either 1st September, 1st January, 1st April, or 1st July, depending on when your course commences.
Additionally, your master's degree program must be provided by an eligible university or college in the UK, including the Open University. Your course can be either full-time or part-time and can be taught or research-based. If you are enrolled in a part-time program, it should not exceed twice the length of the equivalent full-time course. In some cases, you may be eligible for a part-time program of up to three years if no equivalent full-time course exists.
It is important to note that you cannot obtain a Postgraduate Master's Loan if you already possess a qualification higher than a master's degree or if you have outstanding repayments for any previous loans from the Student Loans Company. However, having a PGCE or a postgraduate diploma or certificate does not affect your eligibility. If you are taking a year out of an undergraduate course to pursue a master's, you may still be eligible for a Postgraduate Master's Loan, but you may no longer be entitled to undergraduate funding.
Furthermore, eligibility for a Postgraduate Master's Loan also depends on your residency status. If you are an EU national, you must reside in England for the entirety of your course. If you are not an EU national, you must reside in the UK for the duration of your studies. These residency requirements apply to those seeking funding for distance learning programs as well.
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Deferring undergraduate loans
To request a deferment for undergraduate loans, your school must verify your enrollment. If your school is listed at studentclearinghouse.org, they will automatically verify it electronically. If not, or if you would like to expedite the process, you can request the deferment period yourself by submitting an In-School Deferment Request Form.
It is important to continue making your payments until you receive confirmation that your deferment request has been approved. You can ask to have the deferment removed at any time if you wish to resume making principal and interest payments. Making extra interest payments during the deferment period can help lower the Total Loan Cost.
If you are considering taking out a loan for a graduate program, it is important to understand the different options available. Graduate student loans are available from both federal sources, such as the U.S. Department of Education, and private sources, including banks and other financial institutions. When considering a private lender, it is crucial to research and compare different options to find competitive interest rates and repayment terms. To apply for a private student loan, you will typically need to provide documents such as proof of enrollment, income verification, and personal identification.
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Postgraduate loan uses
Postgraduate loans can be used to cover course fees and living costs while you study for a master's degree. The loan is paid directly to the student in three instalments during the academic year. Students can choose how to spend the money, whether it's directly on the programme or on accommodation and living expenses.
The loan is available for both full-time and part-time master's courses. The amount you can get does not depend on your household income, and you can borrow up to £12,858 if your course starts on or after 1 August 2025. The loan is not means-tested, and having a loan from a previous undergraduate course will not affect your eligibility.
To be eligible for a postgraduate loan, you must meet certain criteria regarding nationality, residency, age, and previous study. You must be a British citizen or have been a resident in England for three years before the start of your course. You must also be under 60 years of age and not already hold a postgraduate qualification or a higher-level qualification such as a PhD.
Postgraduate loans are also available from private lenders, such as Lendwise, which offers loans with competitive rates and student-friendly terms. These loans can be used alongside government postgraduate loans to bridge any funding gaps. Applications for private postgraduate loans are assessed based on future earnings potential rather than just a credit score.
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Repayment thresholds
Postgraduate loans, also known as Plan 3, are for students pursuing master's degrees or other postgraduate qualifications. The income threshold for these loans is £21,000 per year, and the repayment percentage is typically 6% of your earnings above this threshold. This means that if you earn above £21,000 per year, you will repay 6% of any income over this amount towards your postgraduate loan. For example, if you earn £28,800 per year, you will repay £41 per month towards your postgraduate loan.
It's important to note that the income threshold and repayment percentage for postgraduate loans are different from those for undergraduate loans. Undergraduate loans typically have a repayment threshold of £25,000 and a repayment percentage of 9%. This means that if you have both a postgraduate loan and an undergraduate loan, you will repay 6% of your income over £21,000 towards your postgraduate loan and 9% of your income over £25,000 towards your undergraduate loan.
The repayment thresholds and percentages for student loans can change over time. For example, the threshold for postgraduate loans was previously £1,750 per month, but it has since been increased to £21,000 per year. It's important to stay updated on any changes to the repayment thresholds and percentages to understand how they may affect your financial obligations.
In addition to the income threshold, there are also time-based thresholds for student loan repayment. For most plans, student loans are written off after 30 years. However, there are exceptions to this. For example, Plan 1 loans are written off after 25 years or when the borrower turns 65, depending on when the loan was taken out. Plan 4 loans are written off after 30 years or when the borrower turns 65, whichever comes first.
Overall, the repayment threshold for a postgraduate loan is an important factor to consider when taking out a loan to fund a master's degree. It determines the income level at which you will be required to start repaying your loan, and the repayment percentage determines how much of your income above this threshold will go towards loan repayment. Understanding these thresholds can help you make informed decisions about your financial situation and loan repayment strategy.
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Postgraduate loan eligibility
Federal Student Loans
If you have federal student loans, your loans are typically automatically deferred while pursuing a master's degree, provided you are enrolled at least half-time. This is known as an in-school deferment. However, it is important to note that there are annual and aggregate limits to federal loans for graduate studies. If you reach those limits, you may need to consider alternative loan options, such as a Grad PLUS Loan, which has a higher rate.
Private Student Loans
Private student loans offered by banks and credit unions may or may not be deferred during your master's studies. It depends on the lender and your loan agreement. Some lenders offer in-school deferments if you are enrolled at least half-time, while others may require you to continue with your existing payment schedule. Reviewing your loan agreement and contacting your lender are recommended steps to understand their policies and request a deferment, if necessary.
Applying for a Postgraduate Loan
When applying for a postgraduate loan, it is important to consider your credit history and ability to repay the loan. Lenders will assess your creditworthiness by evaluating your history of borrowing and repaying loans. If your credit history is not strong, you may consider adding a cosigner with good credit to improve your chances of loan approval. It is also essential to borrow responsibly and only take out loans that you can afford to repay with interest.
Additionally, the amount you can borrow for graduate school depends on the loan. Some loans allow you to borrow up to 100% of the school-certified Cost of Attendance (COA), which includes tuition, fees, room and board, books, travel, technology, and personal expenses.
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Frequently asked questions
No, you can take out a loan for a master's degree even if you still have debt from your undergraduate degree.
This depends on the type of loan and your lender. Federal student loans are usually automatically deferred while you're studying. Private lenders vary—some offer in-school deferments, while others require you to continue with your current payment schedule.
Contact your lender to request a deferment and ask about their specific policies. You will likely need to fill out a form and provide proof of your enrolment in graduate school.
You can apply for a Postgraduate Master's Loan if you are a UK national or Irish citizen, or have settled status under the EU Settlement Scheme. You must have been living in the UK, the Channel Islands, or the Isle of Man for three years before the start of your course. You can also apply for funding from private lenders, such as banks and credit unions.
