What happens to your Student Loan if you drop out of university?
If you're thinking about dropping out of uni but aren't fully sure what would happen to your Student Loan, don't worry. Here are the key things to know...
Our latest National Student Money Survey found that as many as 76% of students have thought about dropping out of uni at some point.
University isn't for everyone and deciding it isn't for you shouldn't be considered a failure by any stretch. The learning environment might not be right for you and that's okay.
However, often students make the decision without fully understanding what happens to their Student Finance (and other legal obligations). This guide will get you on track, and if you've yet to jump ship, it should help with your decision making.
What's in this guide?
How much money will you owe if you drop out?
Once your university has confirmed your withdrawal with the Student Loans Company (SLC), all future Student Finance payments will be stopped, for both parts of your Student Loan. There's a good chance you'll have other obligations too, which we'll touch on below.
Tuition Fee Loan
Your Tuition Fee Loan is the part of your Student Finance that covers the costs of your degree.
It's paid directly to your university in three instalments each year. The first two instalments are paid at the start of terms one and two and each makes up 25% of the total amount borrowed. The last one is paid at the start of the third term and equates to 50% of your loan for that year.
You can currently get up to £9,250 per year towards your tuition fees, so double-check how much you have taken out this year and any previous years. This is the amount you will have to pay back (minus the fees for terms you haven't yet completed) plus added interest.
It's worth bearing in mind that you will still be charged for a full term even if you drop out halfway through. This will be added to your loan balance which becomes repayable later on.
How much will you owe per semester?
|Dropout date||Total debt*|
* Interest will be added to this amount during your time at university at the rate of RPI + 3%.
Please note that the above table applies to students in England.
For students in other parts of the UK, the amounts you'd owe would vary depending on the size of your Tuition Fee Loan. The structure would remain the same – the amount you'd owe would depend on which term you leave, and how much of the Tuition Fee Loan you've received up until that point.
Have a crack at working out how much you'll be paying back and how long it'll take you with our Student Loan repayment calculator.
Your Maintenance Loan covers day-to-day living costs. It's paid directly to your student bank account in three instalments throughout the year, one at the start of each term, and each instalment equates to roughly a third of the total amount borrowed for that year. The official Maintenance Loan split is 33/33/34. Note that in Scotland, loans are paid monthly.
The amount you're entitled to depends on your household income (i.e. how much money your parents make) and your living situation (whether you're living at home, away from home outside London or away from home and in London).
As an example, students from England can get up to £9,488 to cover living costs if they live away from home and outside of London (and up to £12,382 if they live in London).
The sum you're entitled to will probably be different from how much your mates are entitled to as everyone's situation is different. Have a look at our full Maintenance Loan guide to find out more.
Double-check how much you have taken out this year and any previous years to start working out how much you will have to pay back, and bear in mind the small amount of interest on top.
Again, you won't have to pay back any Student Finance you have not yet received.
Grants and bursaries
You may have received a grant or bursary on top of your Tuition Fee Loan or Maintenance Loan, such as Disabled Students' Allowances (DSA), an NHS bursary or money from your university's hardship fund.
These, in general, do not have to be paid back – but you are only entitled to them for as long as you're enrolled as a student.
Make sure you let your university know the exact date you decide to terminate your studies to avoid having to pay back any money you weren't entitled to (and may have spent in the meantime).
If you received a grant or bursary from any other source, you will need to get in touch with the provider to let them know you have withdrawn from your university and will need to stop receiving payments.
SLC will take the grant or bursary you received into account when they reassess your situation to avoid leaving you out in the cold.
Unsure whether this section applies to you? Take a look at our list of grants and bursaries to see if any ring a bell.
You might also be bound by a contract for any student accommodation you are renting, possibly for the remainder of the academic year.
This means that you may have to pay rent until you come to an agreement with your university accommodation provider or your landlord about your moving out date.
Let them know that you're withdrawing from university to figure out the best way forward and avoid getting yourself into a legal tangle.
Student Loan repayments after you drop out
You may have to start paying a portion of your Student Loan back once you have withdrawn and then repay the rest further on down the line.
You're only entitled to your Maintenance Loan for the portion of the course for which you are enrolled. There is a chance that SLC will claim back some of the money they've already loaned you if you do decide to drop out.
For example, if you drop out 60% of the way through a term for which you have already received funding, you might have to start paying back the funding for the other 40% straight away.
But don't sweat it – SLC will get in touch with you to arrange an affordable repayment plan that won't leave you in a financial black hole.
You'll only have to start repaying the rest of your loan from the April after you withdraw from your course, and even then you must be earning over the repayment threshold (which varies depending on which repayment plan you're on).
An ex-University of Nottingham student told Save the Student that he decided university wasn't for him at the end of the second year of his undergraduate degree in Manufacturing Engineering in 2014.
He started paying his Student Loan back in 2015 once he was earning over the then-threshold of £21,000 a year (the threshold for these loans has since increased to £27,295 for people with a Plan 2 loan – if you're not sure which plan you're on, check out our guide to repaying your Student Loan).
I'm paying back my first two years as standard as if I graduated now I'm working.
Will you be eligible for funding in the future?
You're usually only entitled to full funding for your first undergraduate degree, even if you don't make it to graduation. If you do decide to go back to uni a few years down the line for another undergraduate degree, your funding may be reduced.
However, this rule is by no means the be-all and end-all of any future possibility of going back to uni later on.
If you dropped out of your first course due to compelling personal circumstances, such as illness or bereavement, you should still be eligible for full funding for your new degree.
Sophie, from London, dropped out of an undergraduate degree in Journalism halfway through the second term of her first year at Bournemouth University in 2016. She decided that university wasn't for her and is now setting up her own photography business.
I hated uni. I didn't want to be there to start with.
She said she felt like she had to go to university because of the pressure she was facing from her parents. She eventually dropped out of her course because of the mental health issues she was struggling with.
The pressure from them to go to uni was immense. I never wanted to go the first time and I hated it. I'm far happier now that I'm doing my own thing and living by my choices.
She was eligible for full funding when she went back to university for the second time. She then decided that higher education wasn't right for her after all and didn't return to complete her third year at the University of Roehampton.
You're also entitled to a year of 'bonus funding' in case your plans go awry and you do have to take a break. This can fund a whole extra year of study on top of the length of your current course.
Again, you'll need to provide evidence of why you had to leave. This could be a letter from your GP, the social services or your uni depending on your circumstances.
This means that you can do the extra year of study and still get full funding for the rest of your course.
Taking a break from university
You might want to consider temporarily taking a break rather than dropping out completely, for example, to support a family member or address mental health issues.
Take care of yourself first, then come back and consider your options later when your situation has improved.
Taking a break for medical reasons
You can request for your Student Finance to include an additional 60 days of funding if you decide to suspend your studies due to ill health or pregnancy. Get in touch with your university who will put your request through to the Student Loans Company.
If you need more than 60 days of extra funding, you can ask SLC for another extension. You'll need to provide SLC with both of the following:
- A letter from your doctor justifying your circumstances
- Proof that you would be in financial hardship without the funding (bank statements, tenancy agreement, utility bills or any other kind of document that demonstrates responsibility for financial obligations during the period of suspension).
Taking a break for any other reason
Sometimes life gets in the way and you may decide to put your studies on hold for other reasons.
You may still be entitled to some of your Student Finance during a break if you have left uni because:
- You are experiencing financial difficulties
- You are struggling with the death of a loved one
- A work placement you were counting on has been prematurely terminated.
SLC will ask you to provide evidence to justify your suspension. Once your situation has been reassessed, SLC will send you a letter detailing how much financial support you are entitled to.
How to drop out of university
If you've made up your mind, and understand your financial obligations as we've explained above, get yourself down to your faculty office and let them know your plans to withdraw from your course. Your uni will then contact SLC to confirm your withdrawal.
SLC will cancel all future payments, recalculate how much Student Finance you're entitled to and let you know when you have to start paying it back.
The admin aftermath of dropping out can cause unnecessary stress at an already difficult time, so don't suffer in silence. Get in touch with your university and with SLC if you encounter a problem. Keep your friends and family in the loop too.
For more information, contact Student Finance England if you're from England, Student Finance NI if you're from Northern Ireland, SAAS if you're from Scotland or Student Finance Wales if you're from Wales.
Have a read of our alternatives to university for other ways to jump-start your career.