Complete guide to student loans when dropping out, changing courses, or completing partial degrees
Not everyone completes their degree on the standard timeline. Approximately one in five students drops out before completion, while many others change courses, take breaks, or restart their studies. Each scenario creates unique student loan situations that differ significantly from straightforward three-year degree completion. Understanding how loans work when you do not complete as planned is essential for making informed decisions about whether to continue, change, or leave your course.
The critical point many students miss is that you keep the debt from partial study even if you never graduate. Someone who completes one year of university and drops out still owes approximately nineteen thousand pounds in student loan debt that enters repayment the April after leaving, with exactly the same repayment terms as someone who completed their full degree. The loan system does not forgive or reduce debt because you did not get your qualification.
This guide covers how debt accumulates during partial study, repayment obligations when leaving without completing, funding implications of changing courses, and options for returning to study later. Whether you are considering dropping out, have already left, or are planning to change courses, this analysis helps you understand the financial consequences and navigate the student finance system correctly to minimize long-term costs.
Leaving university before completing your degree triggers immediate consequences for your student loans and future funding entitlement. Understanding these consequences before making decisions helps avoid costly mistakes.
When you permanently withdraw from your course, Student Finance England stops your funding immediately. Any tuition fee payments already made to your university for the current term are not reclaimed, and you owe that full amount. Maintenance loan payments already received are yours to keep, but future scheduled payments for the academic year stop immediately. You do not receive refunds or debt cancellation for dropping out.
Repayment obligations begin the April following the tax year when you left, regardless of whether you found employment or pursued other education. Someone dropping out in December of year one enters repayment in April of the following tax year, exactly four to sixteen months after leaving depending on when during the academic year they withdrew. This is the same repayment start date as someone completing their full degree and graduating that same academic year.
First Term Dropout (October to December)
Received first term maintenance payment of approximately three thousand pounds and university received first term tuition fee of approximately three thousand pounds. Total debt around six thousand pounds. Interest already accruing at RPI plus three percent. Repayment starts following April, approximately four to six months after dropout. Many students in this position work minimum wage jobs earning below repayment threshold, making zero repayments while debt grows through interest.
End of First Year Dropout (June)
Received full year funding of approximately nineteen thousand pounds combining tuition and maintenance. Debt balance with interest approximately nineteen thousand five hundred pounds. Repayment starts following April, ten months after dropout. Higher debt burden than first term dropout but had full year of education before deciding to leave. Some universities allow you to claim the year as a diploma or certificate of higher education if you passed sufficient credits.
Second Year Dropout
Accumulated approximately thirty-eight thousand to forty thousand pounds in debt across two years of study. Larger debt burden but had two years of university experience and potentially transferable credits. May qualify for diploma of higher education from some universities. Faces same repayment terms as first year dropout but with double the debt balance accruing interest.
Understanding exactly how much debt you accumulate during partial study helps with decision-making about whether to continue or leave your course.
Tuition fees for a full academic year are nine thousand two hundred fifty pounds, charged in three equal terms of three thousand eighty-three pounds each. Universities receive payment for each term at the start of that term. If you drop out during first term, university keeps first term fee of three thousand eighty-three pounds. If you complete first term and drop out during second term, university keeps both first and second term fees totaling six thousand one hundred sixty-six pounds.
Maintenance loans for the full year average around ten thousand pounds, paid in three installments at the start of each term. First installment is typically larger at around four thousand pounds with subsequent payments around three thousand pounds each. If you drop out after first term, you received approximately four thousand pounds maintenance. Total first term debt reaches approximately seven thousand pounds combining tuition and maintenance.
Interest accrues immediately at RPI plus three percent, currently around six point two five percent annually. On seven thousand pounds debt, that is approximately four hundred thirty-seven pounds interest per year. If you drop out in December and start repayment the following April, approximately four months of interest accumulates adding around one hundred fifty pounds to your balance before any repayment begins. This interest capitalization means you owe interest on the interest in future years.
Someone dropping out after one year owes approximately nineteen thousand five hundred pounds. Someone completing a full three-year degree from the same start year owes approximately sixty thousand pounds at graduation. The dropout has accumulated one third the debt for one third the education. However, the dropout gains no qualification and limited career benefit from one year of university, while the graduate gains a degree potentially worth substantially higher lifetime earnings.
Both enter repayment on the same timeline relative to when they left university. Both face identical repayment thresholds and rates. The key difference is debt amount and earning potential. The dropout with nineteen thousand pounds debt may repay a significant portion before write-off if they achieve moderate earnings without a degree. The graduate with sixty thousand pounds debt will likely never repay the full amount, treating it as a graduate tax. For detailed repayment projections, use our Plan 2 calculator.
Dropout student loan repayment works identically to graduate repayment. You are not treated differently or given special consideration because you did not complete your degree.
Repayment begins the April following the tax year when you permanently left your course. If you dropped out in December 2023, repayment starts April 2025. If you dropped out in March 2024, repayment still starts April 2025 since you left during the 2023-24 tax year. This timing applies regardless of whether you are employed, continuing education elsewhere, or unemployed.
Your loan is collected via PAYE if employed or Self Assessment if self-employed. The threshold for Plan 2 loans is twenty-seven thousand two hundred ninety-five pounds annually. On any employment income above this amount, nine percent is automatically deducted by your employer and sent to Student Loans Company. If earning below threshold, you make zero repayments regardless of your outstanding balance.
Low Earner Path (Twenty to Twenty-Five Thousand Pounds)
Earning below threshold means zero repayments. Debt grows through interest at approximately six percent annually. Original nineteen thousand pounds balance grows to approximately thirty thousand pounds over fifteen years with zero payments. At thirty-year write-off, entire balance is forgiven. Total paid: zero pounds. This is common for dropouts working retail, hospitality, or administrative roles without degree-level qualifications.
Moderate Earner Path (Thirty to Forty Thousand Pounds)
Earning thirty-five thousand pounds triggers repayment of seven hundred pounds annually. Over thirty years, total repayments reach approximately twenty-one thousand pounds. Original nineteen thousand pounds balance grows initially through interest exceeding payments, peaks around twenty-five thousand pounds, then slowly declines. At write-off, small balance remains to be forgiven. This is achievable for dropouts moving into skilled trades, sales, or technical roles.
High Earner Path (Fifty Thousand Plus)
Earning fifty thousand pounds triggers repayment of two thousand forty-three pounds annually. Debt repaid fully within approximately twelve years. Total paid around twenty-five thousand pounds including interest. No write-off benefit. This is rare for dropouts but possible in entrepreneurship, technology self-learning, or family business scenarios where degree is unnecessary for high earnings.
Changing your course during university is different from dropping out completely. Student Finance England allows course changes with continued funding under specific circumstances, but you use up years of entitlement.
You are entitled to funding for the length of your course plus one additional year. A three-year degree entitles you to four years of funding total. If you complete one year then switch courses, you have used one year of entitlement leaving three years remaining. Since the new course is also three years, you have exactly enough funding to complete it. However, if you switch again or repeat a year, you exceed your entitlement and lose funding for final years.
When changing courses, Student Finance assesses whether the change is reasonable and unavoidable. Academic failure, health problems, or discovering the course is unsuitable early are typically accepted reasons. Simply deciding you prefer a different subject after two years is less likely to maintain full funding. You must apply explaining your circumstances and Student Finance decides case by case. For detailed guidance, see our course change guide.
Every year of study accumulates approximately nineteen thousand pounds in debt regardless of whether you complete that course or switch. Someone who studies one year of History then switches to three years of English graduates with approximately seventy-six thousand pounds debt from four years total study. This is nineteen thousand pounds more debt than someone completing a single three-year course directly. However, they gain the same final qualification and face identical repayment terms, so the extra debt may not matter if it never gets fully repaid before write-off. The key consideration is whether the course change was necessary for degree completion versus simply extending time at university accumulating unnecessary debt.
Many students who drop out eventually return to higher education. Understanding how previous study affects new funding is crucial for planning your return.
Your funding entitlement is reduced by years of previous study. If you studied one year then dropped out, you have three years of funding remaining for undergraduate study. If you return to a three-year course, you receive full funding. If you return to a four-year course, you only receive funding for three years and must self-fund the final year.
Previous study debt remains on your account and continues accruing interest. New study adds to this existing balance. Someone who dropped out after one year with nineteen thousand pounds debt, then returns and completes a three-year degree, graduates with approximately seventy-six thousand pounds total debt. Both the original dropout debt and new completion debt are repaid together under the same terms, with write-off applying to the combined balance thirty years from when you complete or leave the new course.
Leaving university without completing your degree does not reduce or forgive your student loan debt. You owe the full amount borrowed and face identical repayment terms as graduates. However, the income-contingent system means many dropouts earning below threshold make minimal repayments before write-off. The key is understanding your obligations and making informed decisions about whether to continue, change courses, or leave permanently.
For more information, see our guides on dropout consequences and repeat year funding.
UK Education Policy Specialist
With over 15 years of experience in UK education policy and student finance, Dr. Sharma founded Student Loan Calculator UK to help students navigate the complex world of student loans.