Loan drops. The days that every student longs for three times a year. The dates that should be circled in every marketer's calendar. But with so much going on, including a cost-of-living crisis, it can feel like an overwhelming time.
To guide you through the next academic year, we’ve pulled together our definitive guide to student loans.
We’ll be answering the questions:
- When do students get their loan drops?
- What do students spend their loans on?
- How is the rising cost-of-living impacting students?
- How can brands best support students?
With top tips, data, and actionable takeaways, this is your one stop shop for all things student loan.
So, what are you waiting for?
What’s a loan drop?
Three times a year, students receive a lump sum of money directly into their bank accounts. It’s a time they’ve often been looking forward to for some time, with many scraping together their last pennies in the days leading up to the loan drop.
In terms of why these are important for students… well, it’s a huge amount of cash! For many in higher education, this will be the largest sum they’ve ever received in one go. The rare nature of these drops (they come three times a year) coupled with the excitement of receiving such a large amount of money means that these events are steep learning curves for many young people. It’s a time to sink or swim.
“Leading up to a loan drop you feel… not anxious, but you’re at the stage where you’re running low and need to supplement it in other ways”, says student Angela. ”The drop certainly feels like a relief.”
Who gets a student loan?
Every student is entitled to two types of loans: a tuition loan to cover the cost of their actual studies and a maintenance loan (that’s the one we’re interested in!).
Students do have to pay back these loans once they’ve graduated, however this isn’t until they start earning a certain amount. More on this later.
What’s a tuition loan?
The tuition loan covers, quite simply, tuition costs for the 3-4 years a student attends university. Unlike a maintenance loan, students never see this money as it’s paid directly to their university by student finance.
Currently, a university course in the UK costs a maximum of £9,250 per year for full-time students or £4,625 per year for part-time students. The tuition loan is split into three instalments, with 25% being paid in the first time, 25% in the second term, and 50% in the final term.
What’s a maintenance loan?
Listen up, because this is the spendable cash. It’s the loan that students use to spend to their heart's content (sadly, rent is included in this…).
A maintenance loan, administered by the Student Loans Company, is a type of financial support provided to eligible students to help support their living expenses whilst they attend university.
The maintenance loan is designed to assist with costs like accommodation, food, transport, and just living life (e.g. going to the pub). It’s the loan students use to pay for their summer getaways, nights out, and clothes hauls.
The maintenance loan is what we’ll be focusing on today.
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How much loan do students get?
The amount that students receive differs based on a few factors, including family income. For students studying in England in 2023/2024 and living away from home (but not in London), their maintenance will be between £9,978 - £4,651 per academic year (depending on household income).
Students studying and living in student accommodation in London will receive a slightly higher amount to accommodate the higher cost-of-living in the capital.
Student maintenance loan payment dates 2024
The timings vary slightly uni to uni, but a student’s maintenance loan is split into roughly three equal instalments across the year. Supposedly, this helps students to be more responsible with their money and prevents them from blowing £10k in their first term. We say supposedly, because uni it doesn’t always work out that way…
This means that students should receive a payment at the start of each term. In other words, student loan drops happen in September, January and April. Students will usually receive a text a few days before each loan instalment, alerting them to the drop. The exact date depends on their course and university.
It’s worth noting that in Scotland, the SAAS (Student Awards Agency Scotland) student loan payments are made every month, rather than three times across the year.
Student loan repayment: Do students pay their loans back?
Sadly for students, they do have to pay their loans back. On the plus side, there are certain plans in place to support them through this process.
- Plan 2 - For loans taken out after September 1st 2012 in England and Wales
In this plan, a graduate starts paying their loan back if they’re earning more than £2,274 per month or £27,925 per year. This kicks in in the April after they finish their course (although there are slightly different loans for postgraduate and part-time students).
If a graduate hasn’t paid off their loan 30 years after they’ve graduated, the remaining amount will be written off. For those that this applies to, this may mean that they’re still paying off their student loan into their early 50s.
- Plan 4 - For loans taken out in Scotland
If a graduate’s income is more than £1,834 a month or £22,015 a year, they’ll start repaying the loan the April after leaving their course. The amount they back will vary year-on-year, and if their income drops below the threshold, they’ll stop paying.
It’s worth noting that for those Scottish students who choose to study in Scotland, tuition fees are a big fat £0.
- Plan 5 - A shiny new plan for those taking loans out in England from August 31st 2023
Those with Plan 5 won’t start paying back their loan until at least April 2026. To do so, they’ll need to be earning at least £2,083 a month or £25,000 a year (meaning the threshold is significantly lower
This loan is wiped after 40 years, not the 30 years that current students have. In other words, Gen Zalphas will have to start paying back their student loans sooner, and for longer. No wonder university isn’t looking quite as appealing nowadays…
What do students spend their money on?
Student loans are used to pay both for necessities and luxuries (hopefully in that order!). With bills, rent, food, and education supplies taking priority, students use any disposable cash to socialise, travel, shop, save… anything that gets them through the academic year.
“Most of my student loan goes on fashion”, says Sulaiman, a student living at home (who therefore doesn’t pay rent or bills). “I usually save my money towards Boxing Day, Black Friday and January [sales]. Each year my basket spend comes to around £700! I’d rather save up throughout the year for these periods.”
However, as the cost-of-living increases, students are having to stretch their loans further and further, with many picking up part-time jobs to just cover basic living expenses.
Some, burdened with the lack of financial education at school, are even heading to social media to teach themselves crucial budgeting and life skills. Student Angela says: “I feel like I’m quite disciplined with my spending and do have a general budget so I’m not tempted to spend a lot just because I have a lot of money coming into my account.” Well done Angela. Be more like Angela.
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We asked students*: If you receive a student loan, what will you be using it for?
- I will be saving it for long-term financial security - 43%
- In-person experiences (travel, going to attractions) - 29%
- Fashion and clothing- 23%
- Going out to eat - 19%
- Technology - 19%
- Socialising (e.g. nightlife) - 17%
- Ordering takeaways - 13%
- I will be saving my loan for luxury items (eg fashion and tech) - 8%
- None of the above - 28%
*Data gathered from 2024 survey of Student Beans users, Pion’s student discount marketplace
What do student loan drops mean for brands?
Loan drop season is a significant time for students and brands alike, so listen up.
The months of January, April and September are two-fold for students: on one hand, it’s a cause for celebration (more money = more pints). But on the other hand, the resulting budgeting issues can lead to stress and panic.
So where do brands come in? Well, this makes it a great time for brands to step up and support young people as they navigate potentially murky financial waters. For example, offering student discounts will not only help them save precious pennies, but will also you hit your targets.
And, crucially, investing energy into student loan drops can have lifetime benefits: 78% of students say they’d stay loyal to a brand if they offered a student discount.
The cost-of-living for students in the UK
How are rising living costs impacting students?
For many, the rising cost-of-living is still a worry. Students are still spending, but eating into their savings or borrowing money to do so. Some students are making an active effort to educate themselves on the financial world to help them make more savvy decisions.
Aside from everyday issues such as food prices and living expenses, this generation is fully aware of the impact that rising inflation will have on their futures. In fact, major concerns include the impact on their credit ratings, their education, careers, and even the housing market. “Inflation means I have less purchasing power, a lot less consumer satisfaction…”, Gen Z student Victoria tells us. “Not because of any difference in the products, but more the regret and guilt of purchasing. It means less confidence in my consumer decisions.”
However, others are adopting the ‘f*ck it’ attitude and spending anyway. Whatever gets you through, I guess.
The state of the world is impacting their mental health, and they need a treat or two to perk them up. You can learn more about this in our ‘Students and the rising cost-of-living: sector report'.
We asked students*: How is the rising cost of living affecting your quality of life?
- I’m cutting down non-essential spending - 72%
- I’m looking for cheaper versions of products - 72%
- I don’t go out as much - 54%
- I’ve had to spend my savings - 38%
- I’ve asked/will ask my friends/family for financial support - 28%
- It doesn’t affect me - 3%
If you’re having to cut down on non-essential spending, what will you be cutting back on*?
- Eating out - 81%
- Clothes/shoes/accessories - 75%
- Holidays/travel - 56%
- Subscriptions - 56%
- Entertainment/gaming - 54%
- Alcohol - 53%
- Home decor - 50%
- Tech - 50%
- Health & beauty - 45%
*Data gathered from 2024 survey of Student Beans users, Pion’s student verification technology
How can brands best support students?
Whilst celebrated, loan drops can be challenging times for students thanks to the resulting budget issues. They’ll be looking to save some precious pennies - in fact, student Sulaiman says he doesn’t really buy clothes at full price at all anymore, saying: “Retailers like Nike or H&M tend to email [or send push notifications about] offers every few weeks or so with 10% of 15% off, so I wait until then.” Moments like this provide brands with great opportunities to step up and make a good first impression via student discounts and finance management tips.
“Budgeting, balancing rent, finances, et cetera, that isn’t taught enough in schools. In university I was pushed immediately into needing how to know how to allocate my salary, the money parents gave me… I literally sank and had debt on my credit card within my first year because I didn’t know what I was doing”, Gen Z student Victoria shares with us.
And, the good news: having a good impression on students isn’t just for their higher education days: 78% of students say they’d stay loyal to a brand if they offered student discounts.
So how can you best support students?
- Incentivise purchases
Gen Z students have less cash to spare on non-essential items, so when they do want to make a purchase, it’s important for you to incentivise them with regular student discounts - this will encourage them to really commit! “Discounts are a good idea”, student Miriam tells us, “it makes us likely to go back if we know there’s going to be a discount.”
As one Gen Zer tells us: “I love brands with a really good loyalty programme - something cheesy that you’re really gonna love!”
Want to know more about the world of student discounts? At Pion, we can help with that. Find out more about the benefits of running a student discount and how Pion can help your brand accelerate your student sales by booking a demo with our team today.
- Brand affinity
It’s not easy to win the loyalty of Gen Z, but once you’ve got them, you’ve got them for life! Consistency and personalisation will encourage young shoppers to return to the reliable brand they know and love, and will also lead to some much-desired peer-to-peer recommendations.
- Authentic connection
Discounts may be the number one driver to purchasing, but what about a brand’s ethical standpoint?
In order to capture this generation's spend and support them, discounts must be driven by values in order to truly connect with students during these turbulent times.
We are Pion: your ticket to next-level growth
At Pion, we help brands harness the growth-driving power of consumer groups with full-funnel insights, advertising and verification. Our ecosystem of solutions helps expand your brand’s customer base and supercharge sales.
Since 2005, we’ve uniquely built our expertise to help brands better understand, engage and grow loyalty with students, Gen Z, and other strategic consumer groups. From initial insight through to targeted promotion, our solutions drive growth on the right platforms, in the right ways - all to take your business to new heights.
Understand, engage and grow with a single partner. You’re in good company. We’re trusted by over 1,000 brands in more than 100 countries.
Get in touch with the Pion team today to discuss your student marketing goals and find the solution to fit your brand.
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