U.K. versus U.S. student loans; what’s the difference?

U.K. loans

Although some people might consider New York the melting pot of the world – a city full of different nationalities and cultures – it could be said that London is one as well.

In the 2015/16 school year, there were 107,200 international students – EU and Non-EU – studying just in London.  London Higher reports that the city remains a top choice for international students to study in.

Study London reports that 6,000 American students earn their degrees in London, while 30,000 choose to study abroad here.

While loans are available in both countries, the methods of dispersion and repayment, and types of loans offered vary between the US and UK.

American students studying in the UK don’t benefit from the UK loan system – an extremely forgiving system – and are meant to use private loan companies to pay for their tuition housing and living costs.


So what are the key differences?


Types of loans and tuition costs

For starters, the UK has two loan types – tuition fee and maintenance fee. This is different than the US where loans essentially cover both tuition and living costs, but also other additional expenses for the student.  

Tuitions fees only cover the cost of one’s tuition, which the UK government has capped at £9,000 a year (approximately $11,000 a year). No matter if you need a loan or not, you’ll never end up paying more than £9,000 a year.

While American universities charge more based on government funding, location, an overemphasis on sports, and the additives and aesthetic of their campus, even top-rate British universities like Oxford University and Cambridge University cap off tuition at £9,000.

Maintenance fee loans cover the student’s living expenses for the year. The maximum you can receive for 2018-2019 is £11,354 per year.

So, if you take out tuition and maintenance fee loans for a three-year course, you’ll never be more than £62,000 in debt. This is different in America where students are not given a loan limit.

US student Kaetlyn Scarpa shares that her student loans will have long-term effects. Both herself and her mother took out loans so that she could attend a school only 30 minutes from her home in New Jersey, “it’s going to hurt both me and my mom because I will have to pay my loans back and also pay my mom back.”

Repayment methods

Both countries require loans to be paid back, but while the US requires students to begin repayment six months after graduation, the UK is known for its lenient repayment approach.

Currently in the UK, you only make payments if your income is over £25,725 per year. If your income exceeds that, there is a capped interest rate of 9% added to your loan balance.

UK resident Annie McKay graduated Cardiff University in 2015 and claims “our loans come out before tax and it’s barely noticeable.” Right now, Annie is paying £8 a month towards her student loans, “it’s not even a thought.”

Interestingly, the UK government treats your repayment amount as any payroll tax and takes it out of your paycheck each month. This feature makes the repayment process duty-free.

Whereas in the US, you mail out payments to the correct company or in some cases, make payments online.

The saving grace of the UK loan system is that they will disappear either after 30 years or if the borrower dies or becomes disabled.

In the US, loans will only disappear once they are paid off or if the borrower dies.

In 2018, Forbes reported that in the US, student loan debt is now the “second highest consumer debt category”, surpassing credit card and auto loan debt.

According to Make Lemonade, 44 million Americans collectively owe $1.5 trillion in student loan debt.


There are many things the US could take from the UK school system, and it’s way of handling loans is definitely at the top of the list.


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