Student Loan vs Bank Loan UK 2026
Some students consider a bank personal loan to fund studies instead of the government student loan. In almost every circumstance, the government loan is the better option.
Side-by-Side Comparison
| Feature | Government Student Loan | Bank Personal Loan |
|---|---|---|
| Repayment trigger | Only when earning above threshold | Fixed monthly from day one |
| Monthly payment | Income-contingent | Fixed regardless of income |
| Write-off | Yes, after 40 years | No |
| Credit check required | No | Yes |
| Affects credit score | No | Yes |
| Interest rate | RPI only (Plan 5) | 6 to 15% fixed |
Why Government Student Loans Win
The income-contingent repayment is the critical difference. With a government loan, if you lose your job or have low earnings, repayments stop or reduce automatically. You cannot default. There is no credit damage and no bailiff.
With a bank loan, the fixed monthly payment continues regardless of income. Missing payments damages your credit score and triggers debt collection.
The 40-year write-off on Plan 5 means most borrowers will never repay the full balance. A bank loan has no equivalent protection.
Always exhaust government loan entitlement before considering any private funding for university.