Postgraduate loan eligibility, repaying undergraduate and postgraduate loans simultaneously, full-time vs part-time study impact, and PhD funding options
Returning to education for a Masters or PhD while carrying undergraduate student loan debt creates a second layer of financial complexity. Postgraduate loans operate independently from undergraduate loans, with different repayment thresholds and interest rates. If you work while studying part-time, you may repay both loans simultaneously—undergraduate at 9% above £25,000 and postgraduate at 6% above £21,000, potentially taking 15% of your income above £25,000.
Full-time Masters students typically stop repaying undergraduate loans during study since they have no employment income, while their undergraduate balance grows with interest. Part-time students continue working and repaying both loans concurrently. PhD students often receive tax-free stipends around £19,000-£20,000 annually, falling below undergraduate repayment threshold but requiring postgraduate loan payments if they took one. Understanding these interactions helps you make informed decisions about postgraduate education timing and funding.
Postgraduate loans are available for Masters and Doctoral study, operating separately from your undergraduate loan with different terms and repayment conditions.
Postgraduate Masters Loan:
Postgraduate Doctoral Loan:
| Feature | Undergraduate (Plan 5) | Postgraduate |
|---|---|---|
| Repayment threshold | £25,000 | £21,000 |
| Repayment rate | 9% | 6% |
| Write-off period | 40 years | 30 years |
| Interest rate | RPI to RPI+3% | RPI+3% fixed |
If you work while holding both undergraduate and postgraduate loans, you repay both concurrently through PAYE. The thresholds and rates stack, creating a combined deduction that can reach 15% of income in the overlap zone.
Between £21,000-£25,000: Pay only postgraduate loan (6%)
Above £25,000: Pay both loans
Formula for income above £25,000:
| Salary | Undergrad Payment | Postgrad Payment | Total Monthly |
|---|---|---|---|
| £23,000 | £0 | £10 | £10 |
| £30,000 | £37.50 | £45 | £82.50 |
| £35,000 | £75 | £70 | £145 |
| £45,000 | £150 | £120 | £270 |
| £60,000 | £262.50 | £195 | £457.50 |
Impact: At £35,000 salary, combined loan payments take £145 monthly (£1,740 annually). This is equivalent to a 5% income reduction.
With 40-year undergraduate write-off and 30-year postgraduate write-off:
Full-time Masters students typically have no employment income, automatically pausing undergraduate loan repayments. Both undergraduate and postgraduate balances grow with interest during study.
Example: 12-month full-time Masters, £45,000 undergraduate balance
Before Masters:
During 12-month Masters:
After graduating (return to £40,000 job):
Living on £12,167 postgraduate loan for 12 months is challenging:
Part-time Masters students continue working full-time, meaning they repay undergraduate loans throughout study and start postgraduate repayments once postgrad loan enters repayment.
| Factor | Full-Time Masters | Part-Time Masters |
|---|---|---|
| Duration | 12 months | 24-48 months |
| Income during | £0 + loan | Full salary continues |
| Undergrad payments | Paused (no income) | Continue throughout |
| Career progression | Paused 1 year | Continuous |
| Time to completion | Faster | Slower but income maintained |
Some employers fund part-time Masters for employees:
PhD students typically receive funded positions with stipends, making postgraduate doctoral loans unnecessary for most. Stipends are tax-free and below undergraduate repayment threshold.
Research Council funding (UKRI):
University scholarships:
Industry/charity sponsorship:
Self-funded PhD (using doctoral loan):
PhD stipend of £19,237 annually:
Opportunity cost of 3-4 year PhD with £45,000 undergraduate balance:
Deciding whether to take postgraduate study should balance career benefits against financial costs, including student loan implications.
Consider these funding alternatives before taking postgraduate loan:
Working graduates repay both simultaneously at combined rates up to 15% of income above £25,000. Full-time study pauses undergraduate repayments while both balances grow with interest. Most graduates will not fully repay either loan, making them function as extended graduate taxes rather than traditional debt.
When working, you repay both loans simultaneously through PAYE. Undergraduate loans are repaid at 9% of income above the threshold, and postgraduate loans at 6% of income above £21,000. Combined, this can total up to 15% of income above thresholds. Both deductions appear on your payslip separately. The repayments are calculated independently - you don't pay one off before starting the other.
If you're studying full-time and not working, undergraduate loan repayments pause automatically since you have no income above the threshold. However, interest continues accumulating on your undergraduate loan balance. You won't make postgraduate loan repayments during full-time study either. Both balances grow with interest during study. Once you return to work, repayments resume for both loans simultaneously.
The combined repayment rate depends on your income. For income above both thresholds, you pay 9% on undergraduate loan (above £25,000-£28,470 depending on plan) plus 6% on postgraduate loan (above £21,000), totaling up to 15% of income above thresholds. However, the thresholds differ, so at certain income levels you might only pay one. Use our combined repayment calculator to see your exact monthly payment with both loans.
No, undergraduate and postgraduate loans have different write-off periods. Plan 2/5 undergraduate loans write off 30-40 years after you first became liable to repay. Postgraduate loans write off 30 years after the April you first became liable. These dates are independent, so one loan may write off before the other. Most graduates won't fully repay either loan, so both function as extended graduate taxes rather than traditional debt.
It depends on your career goals and financial situation. For most graduates heading toward write-off, taking a postgraduate loan doesn't change the outcome - you'll still pay 9% on income above threshold, just with a higher balance that gets written off. However, if you can fund a Masters through savings, employer sponsorship, or research council funding, that avoids additional debt. Consider whether the Masters significantly improves your career prospects and earning potential.
You can make voluntary overpayments to either loan, but it's rarely worthwhile. For most graduates heading toward write-off, overpayments are wasted money since both loans will be cancelled anyway. The mandatory repayments through PAYE are calculated automatically and can't be prioritized. If you're a high earner on track to fully repay both, you might consider overpaying the one with higher interest rate, but this requires careful calculation and usually isn't beneficial.
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.