Student loan agreement (family)

Topping up what Student Finance doesn’t cover

Maintenance loans are means-tested against household income, which quietly assumes parents will make up the difference — and in most university towns the difference is real rent, paid monthly. When that top-up is meant to come back after graduation, recording it as a loan keeps everyone’s expectations aligned: the student knows the number, the parents know the plan, and nobody discovers a disagreement at 25.

Interest-free is fine — and usually right

There’s no legal need to charge interest on a family loan, and for students, most families don’t. The agreement can set the first payment months or years out — the September after the course ends, say — at a rate a graduate salary actually survives. If you do charge interest, remember it’s savings income in the lender’s hands for tax purposes.

Example: £6,000 across final year

Written down, the arrangement is an act of confidence in the graduate she’ll be — not a bill hanging over the student she is.

What the agreement should pin down

• The amount and the date the money moves — with a payment reference on the bank transfer so the advance is provable.
• The repayment plan — instalments or a single date, and what happens if a payment is missed.
• Interest, if any. There’s no statutory cap between family members; the builder warns (never blocks) at 25%+. Remember interest you receive is taxable income.
• Loan, not gift — stated in terms. It protects the borrower’s siblings, the lender’s estate planning, and everyone’s memory.
• Signatures from both sides — electronic signing is valid in England and Wales, and it’s how LendRight finishes the job.

If repayment stalls

Money claims start online wherever you live — through Money Claim Online or the County Court Money Claims Centre — and claims up to £10,000 usually go to the small claims track, built for people without solicitors. If an in-person hearing is ever needed, it’s listed at a county court hearing centre convenient to the defendant, wherever in England and Wales they live. In practice, a signed agreement plus a bank record is usually enough to make the conversation end long before a courtroom.

Under the Limitation Act 1980 you generally have six years from a missed due date to bring a claim on a simple contract — one more reason the agreement should set real dates.

Scotland and Northern Ireland — a different story

If either of you lives in Scotland or Northern Ireland, the builder will tell you honestly that we can’t serve you yet — those are separate legal systems, and a template written for England and Wales isn’t automatically right there. Everything about that decision is on our coverage page.