21st September 2026
Scotland is often described as offering university education for free because eligible Scottish students studying at Scottish universities do not have to pay tuition fees.
But university is certainly not free.
Students still have to pay for accommodation, food, travel, books, clothing and all the other costs of living. Increasingly, those costs are being met through student loans.
The latest figures from the Student Loans Company provide an interesting insight into how much money is now flowing into the Scottish student finance system.
During the financial year 2025-26, £853.6 million was paid out in undergraduate loans to Scotland-domiciled students.
That was a 10.5% increase on the previous year.
Most of the money was for living costs. Maintenance loans accounted for £789.6 million, an increase of 11.1% in one year.
This is a substantial amount of money being borrowed by students simply to get through their university years.
Free tuition does not mean free university
The Scottish Government's policy is that eligible students should be able to attend higher education without tuition fees, with financial support also available according to household income and personal circumstances.
That support consists of a mixture of bursaries and loans.
The distinction matters.
A bursary does not normally have to be repaid. A loan does.
As living costs have increased, more money has been made available through the student support system. The Student Loans Company says the maximum undergraduate funding package increased substantially from academic year 2024-25, contributing to the large rise in maintenance lending.
So the increase in borrowing does not necessarily mean that students are suddenly behaving differently. It can also reflect changes in the amount of financial support available and the cost of living while studying.
Scotland's student loan book has reached £10.4 billion
The bigger number is perhaps the most striking.
At the end of March 2026, the total outstanding higher education Income Contingent Repayment loan balance for Scotland-domiciled borrowers was £10.4 billion.
That was £1 billion, or 10.4%, higher than the £9.4 billion recorded a year earlier.
The loan balance has risen dramatically over the longer term. It stood at £3.1 billion in 2013-14.
The increase does not mean that £10.4 billion will necessarily be collected from graduates. Student loans operate very differently from an ordinary bank loan.
Repayments depend on income. Borrowers normally begin making repayments only once they are earning above the relevant threshold, and outstanding balances can eventually be cancelled under the applicable rules.
In 2025-26, higher education borrowers repaid £209.6 million, only 3.1% more than the previous year.
That means the loan book is continuing to grow because new lending and interest added to existing balances are exceeding repayments and write-offs.
The average debt is rising too
There is another figure worth watching.
The average higher education loan balance for borrowers entering repayment in 2025-26 was provisionally £21,000.
That was a 16.3% increase on the previous year.
The Student Loans Company says the rise is likely to be partly associated with the 40% increase in available maintenance funding from academic year 2024-25, together with changes to the repayment threshold.
This is an important distinction.
A student borrowing more does not necessarily mean they will have to make a larger monthly repayment immediately. The repayment system is based on income rather than simply the size of the outstanding balance.
But a larger balance can remain outstanding for longer, and interest continues to be applied.
There is another side to the figures
The interest rate applied to Scottish higher education loans has fallen from the unusually high levels seen in recent years.
As a result, interest added during 2025-26 fell by 19.9% to £358.3 million.
That is welcome for borrowers, but it has not stopped the overall loan balance rising because new lending continues to exceed repayments.
There were also fewer borrowers making repayments through HMRC during the year. The provisional number fell by 7.9% to 229,700.
The Student Loans Company points to the continued increase in the repayment threshold as one likely factor.
What does this mean for Scotland?
There are two ways of looking at the figures.
One is that Scotland has maintained a system designed to ensure that young people are not prevented from attending university because they cannot afford tuition fees.
The other is that the cost of supporting students has increasingly shifted towards borrowing to meet living costs.
That raises a wider question about whether the present balance between bursaries and loans is sustainable.
The Scottish Government says its approach is based on the principle that education should depend on the ability to learn rather than the ability to pay. But students still have to find the money to live while studying.
For a student from a relatively wealthy family, parental help may reduce the need to borrow.
For someone from a low-income household, the student support system may be much more important.
This is particularly relevant to rural Scotland. A young person from Caithness who has to leave home to study may face accommodation and travel costs that a student living with their parents does not.
Free tuition removes one major expense, but it does not remove those other costs.
The £10.4 billion question
Scotland's student loan book has grown from £3.1 billion in 2013-14 to £10.4 billion today.
At the same time, the amount being borrowed each year continues to increase.
That does not mean Scotland has made a mistake in providing student support, nor does it mean that every pound of the loan book will eventually have to be recovered from graduates.
But it does show that free university tuition is only one part of the cost of going to university.
The increasingly important question may be how much of that cost is being met through grants and bursaries, how much through student borrowing, and ultimately how much of the loan book will actually be repaid.
For today's students, the most immediate issue is much simpler.
University may be free of tuition fees in Scotland.
Getting through university certainly isn't.