# What is a student overdraft?

> Quick answer · Last updated 23 June 2026

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## In short

An interest-free arranged overdraft on a student bank account, usually tiered by year of study. It is borrowing — not free money — and must be repaid, often soon after graduation when interest charges can apply.

Most student current accounts include an arranged overdraft with 0% interest while you are studying. Limits often start around £500 to £1,000 in year one and rise in later years — for example up to £2,000 or £3,000 — if you stay within the account terms.

An arranged overdraft is still debt. The bank agrees a maximum you can go below zero; spending beyond that is unarranged borrowing and can trigger charges or refusal, even on student accounts. Stay within the agreed limit and track what you owe.

After graduation, banks typically switch you to a graduate account. The overdraft may stay interest-free for a year or two but usually reduces over time, and standard overdraft interest applies once the grace period ends. Plan how you will clear or reduce the balance before charges begin.

Compare student accounts on the total package — overdraft limit, free perks, and branch access — not just the headline 0% offer. gov.uk's student finance guidance covers loans and budgeting; the overdraft is separate borrowing from your bank, not from Student Finance England.

## Related

- [Students guide](https://moneyguide.org.uk/students/)
- [What are overdraft charges?](https://moneyguide.org.uk/answers/what-is-overdraft-charges/)

## Primary source

gov.uk/student-finance-explained/extra-help

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.