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For undergraduates who live in England and started their studies this year, there are big changes to how loans are repaid. Financial expert and campaigner Martin Lewis says these changes are “both subtle and massive. They’re going to increase the eventual cost of going to university by more than 50% for many typical graduates.”

So what is changing? Well, at the moment, graduates begin repaying student loans at 9% of everything they earn over £27,295 but that threshold will fall to £25,000.

Now, students in England will pay back 9% of their earnings over £25,000 from the April after they graduate. This is lower than the current threshold of £27,295. They will also have to pay the loan back for longer before it is written off – 40 years instead of 30. A government spokesperson says: “Graduates who earn less than the repayment threshold – which will be £25,000 in financial year 2026-27 – will not have to make any repayments.”

And the good news is that any outstanding debt will be written off after 40 years. No commercial loans offer this level of protection.

2. Interest rates on loans have come down

Alongside those changes to loan repayment periods were changes to the rate of interest that can be charged.

Martin Lewis adds: “There is some good news. Last year’s starters paid higher interest than you. They paid up to inflation plus 3%. You’re just going to pay the rate of inflation so there is no longer a real cost, above an inflation cost, to these loans.”

3. More universities encourage paid work

Parents might hope their teens are studying hard but paid work could also help them budget. In fact, some universities are now encouraging their undergrads to work.

Almost half of universities promote part-time work on their websites, according to the Higher Education Policy Institute, which describes this as a major change in their attitude.

Anna, a student in her fourth year of studies, spends her evenings pulling pints in the student bar. “I think that working is super imperative for me being able to actually afford anything at university. My maintenance loan goes towards my rent, I also get a bursary from the student union so I use that to help me with my living costs but working is my little bit of extra spending money that you need when you’re a student.”

4. It is always worth asking for a student discount. Always

Freshers will often find that their student union or even the societies they choose to join will have arranged discounts and offers with local businesses, to help undergraduates stretch their cash a little bit further.

Because a lot of smaller businesses, as well as big brands, want to attract students as customers.

Tom Allingham from the website Save the Student says: “A lot of big brands offer student discounts but one great tip I would give is that wherever you’re going, always ask for a student discount even if it is a small, local independent place. The worst that can happen is they say ‘no sorry, we don’t’. And the best case is that you get 10-20% off whatever you buy.”

A lot of students might spend a fair bit of money at the student union bar but the union itself might be able to provide some real support. Increasingly, they are responding to the rising cost of living with additional help for anyone who is struggling to cope.

Many unions are offering budgeting tutorials to help people who've just left home learn those important skills.

At the University of Leeds, student union education office Bethan Corner explains what they have been offering: “Student unions all across the country are doing so much for the cost of living and for students all the time. Last year we did a free breakfast for students that was hugely popular. This year we’re really looking at the bigger picture and recognising so much more of the wider needs.

“We’re working with the university in partnership to ensure there’s more educational based things or more support from our job link service that can give students a better chance of getting jobs and help with their CVs. We’re also focusing on offering safe warm spaces with microwaves and showers.”

Many unions are even offering budgeting tutorials to help people who’ve just left home learn those important skills.

6. Universities have hardship funds

Alongside whatever support a student union is offering, many unis have hardship schemes to help out people who are really struggling to make ends meet.

This academic year, the government made £276 million available to universities to top up their hardship schemes.
Louise Banahene, director of educational engagement at the University of Leeds, says they are receiving more requests for help and giving out more funding:

“That’s for two reasons: firstly there is certainly increased demand for it. Secondly, we’ve also promoted it more and that’s really as part of our work around the cost of living where we want to ensure that students who need that funding can access it."

“What’s really important is that we want to, as far as possible, provide that support upfront. If we can provide it upfront before students even get into trouble then that’s positive for us.”

7. There could be grants available from outside the uni

The university and student union are the obvious first places to turn to for support, but Tom Allingham suggests that there can sometimes be help available elsewhere.

“Loads of private organisations and charities do offer their own bursaries, scholarships and grants,” he says. “You will have to search them out, you will have to apply for them yourself but it’s definitely worth doing that."

“They aren’t just reserved for the usual things like good grades or low income backgrounds. There are loads more niche criteria out there.”

8. Students might need to budget for a bin

Even if you’re having the time of your life, there are still some unlikely costs that crop up when you leave home for the first time.

For Alix and Millie, there were a number of unexpected but urgent purchases. “One too many things! A toaster. I was not expecting how much I would miss a toaster so we’re all going to chip in. And a waste paper bin,” says Millie.

“Yes, you’d expect a bin in your room but apparently not!” adds Alix.

So there you are. Perhaps consider buying the student in your life a bin.

For more advice like this listen to the Money Box Live student finance special on 麻豆社 Sounds now.

The information contained in this article was correct at the time of broadcast on 27 September, 2023.