Student finance: How much does university cost and does it increase earnings?

Students starting university in England this year face big changes to the way student loans work.

And with these changes coming alongside the cost-of-living crisis, some are wondering whether university makes financial sense.

The combined cost of tuition fees and accommodation for an undergraduate UK student varies:

These estimates use data from the National Union of Students (NUS) and the Unipol housing charity. They assume students pay the maximum fees in the nation where they already live, spend one year living in university halls and other years in private accommodation. The figure for England includes London averages.

Students also need to budget for other big expenses which are not included - food, transport, course materials and going out.

The cost of tuition per year also varies:

If you are leaving home to study, it is generally cheaper to live in university-owned accommodation.

In 2021-22 (the latest figures available) average rent for university-owned rooms was £6,227 per year, and £7,732 for private rooms.

There are big differences between areas.

In London, the average cost for university-owned rooms was £7,546 per year and £12,034 for private rooms.

In England overall, it was £6,471 a year for university-owned rooms and £7,833 for private accommodation.

Scotland was £5,809 for university accommodation and £7,322 for private.

For Wales it's £5,106 and £6,694, and for Northern Ireland it's £4,565 and £6,698.

Most UK students take out student loans.

Eligibility and repayment rules differ across the UK, but student loans are typically made up of two elements:

Most people are entitled to the tuition fee element, which is equal to the annual cost of your course up to £9,250 per year.

The maintenance loan is intended to cover accommodation, food, books and equipment.

The amount you get depends on your family's household income. If your parents earn above a certain amount they will be asked to contribute to your living costs.

You might get extra money if you are disabled or have children.

If you're under 25 and have no contact with your parents, you might be able to apply as an "estranged student" which means their finances are not considered.

Students in England can borrow up to £9,978 a year for a maintenance loan if living outside London and away from their parents. This increases to £13,022 in London.

In Scotland, the maximum annual maintenance loan is £8,000. In Wales it is £10,720, and in Northern Ireland the maximum loan is £6,776.

Students are charged interest on their total loan from the day they take it out.

If you live in England and are starting university in September 2023, you will pay back 9% of your earnings over £25,000 from the April after you graduate. This is lower than the current threshold of £27,295.

You will also have to pay the loan back for longer.

Under "Repayment plan 5", any outstanding debt will be written off after 40 years, instead of 30.

However, the amount of interest charged is being cut. New students will be charged interest equal to the retail price index (RPI) measure of inflation, instead of the current rate of RPI plus 3%. (The current RPI rate is 10.7%).

The government says this means new students "will not repay more than they originally borrowed over the lifetime of their loans, when adjusted for inflation".

But Martin Lewis, founder of MoneySavingExpert.com, says extending the period over which university leavers pay back their loans will increase "costs by thousands" for lower and mid earners, who are unlikely to completely repay their loan.

Labour also said the changes will "hit those on low incomes hardest".

Eligible students in Wales and Northern Ireland can also claim maintenance grants which are not repaid.

Full-time undergraduates normally resident in Wales are entitled to at least £1,000. There is up to £10,124 for students from the poorest backgrounds in Wales who study in London.

In Northern Ireland the maximum maintenance grant is £3,475.

The Scottish government offers financial support to certain categories of students, such as those with dependants.

Across the UK, students in financial difficulty can apply for hardship funding from their institution, which does not usually have to be repaid.

They may also be entitled to financial assistance from charities.

Most students will leave university owing money. The average debt for students who start university in England this year, for example, will be about £43,000.

In general, most graduates can expect to earn more than non-graduates, according to the Higher Education Statistics Agency (HESA).

However, it suggests the extra money earned as a result of a university education has reduced over time.

According to data from HESA's survey of 2020-21 graduates, the average salary reported 15 months after gaining a degree was £27,340.

How much graduates earn also depends on the subject studied and university attended.

Research by the IFS think tank in England suggests, on average, women who studied creative arts and languages degrees earned the same amount in their lifetime as if they had not gone to university.

Women who studied law, economics or medicine earned more than £250,000 more during their career than if they had not got a degree.

Men who studied creative arts on average earned less across their lifetimes than if they had not attended university. Male medicine or economics graduates earned £500,000 more.

Attending university can help students from poorer backgrounds earn more than their parents might have done, according to research by the Sutton Trust in England.

But only a fifth of graduates who were eligible for free school meals went on to be in the top 20% of earners - compared to almost half of graduates who attended private schools.