Loans for full‐time students on non‐postgraduate courses were introduced by the 1990 Education (Student Loans) Act, and were offered at an interest rate level with the rate of inflation, while at the same time student eligibility for financial help through the social security system was withdrawn. Previously, undergraduates' fees were in most cases met by their local authority. As this financial support was withdrawn, the proportion of ‘top‐up’ fees necessary was increased, so that students in England without bursaries or other sources of income are now expected to fund their tuition fees and living expenses through a combination of student loan and parental support or part‐time work. In 2000 the loan system was extended to include part‐time students on low incomes. The loans are administered through the Student Loans Company (SLC), a public sector organization, which also manages the collection of repayments from students no longer in higher education. The amount of the loan for which the student is eligible depends upon their course and place of study, their individual circumstances, and where they live. The SLC administers loans for tuition fees, for maintenance (living expenses), and for additional support in cases where the student has dependants, a disability, or a learning difficulty. Loans are paid in equal amounts at the start of each academic term. All students on eligible courses are entitled to 75 per cent of the maximum loan. Eligibility for part or all of the remaining 25 per cent is based on an assessment of income.
Loans are repaid through the income tax system, repayments not beginning until the ex‐student is earning over £15 000 per annum. The repayment is scaled to the loan‐holder's income, a system known as income‐contingent repayment. Nevertheless, opponents of the loans system argue that it discourages young people from lower‐income families from applying for higher education, and is therefore socially divisive. In Scotland, where tuition fees were abolished in 1999, student loans are assessed and awarded through the Student Awards Agency for Scotland. Loans are means‐tested in the same way as student loans in England.