American loan firm Sallie Mae is coming to Britain, so how do you cash in?

When the harsh realities of the big wide world set in, thousands of graduates wish they were back in education. In fact, six months after graduation, nearly one-sixth of UK full-time undergraduates find themselves on postgraduate courses. More than 80 per cent of these do so without getting a job to pay for it. So just how do all these people fund their Masters degrees?

Universities are an obvious first port of call for graduates needing funding. It's still the case that the majority of funding opportunities are channelled through higher education institutions. The other option is to take out a career development loan – the Government's offering. The good thing is that the Learning and Skills Council will pay the interest on your loan for the duration of your course and then for one month after.

But the career development loan is simply an adult learning loan, and not tailored to postgraduates – a problem that an American company called Sallie Mae wants to remedy. "Our contacts in the UK made us aware of a big problem: that there was no dedicated finance programme for postgraduates in the UK," says Elizabeth Brandes, director of international business development at Sallie Mae.

The largest provider of college loans in America, Sallie Mae lends to more than 10 million US college students, and began operating in the UK in 2005. Sallie Mae UK offers postgraduate-specific loans and recognises that funding issues for postgraduates are set to become yet more pointed, with top-up fees leaving future graduates students with twice or even three times the debt of those who entered higher education before the variable fees came in.

Brandes also argues that another barrier to students is the lack of information about funding for Masters degrees. "When we did start speaking with British students we realised that there is not much information out there, compared to the US," she says.

This lack of information is something Sallie Mae will be particularly keen to get over. The British public is typically suspicious of private loan companies that are offering to lend money.

"We do have that whole branding problem in the UK," admits Brandes. "One of the things we do is to work very closely with the universities. We want to be a responsible provider to make sure we're lending the money a student needs and building a solid relationship so we're a trusted institution for the student looking to enter higher education."

Sallie Mae offers loans of up to £20,000 a year, covering your entire costs and needs. Repayments are made at a rate of interest over anything from 15 to 30 years. But they will only lend you as much as your university says you need, so you don't end up borrowing more than you can afford to pay back.

For that reason, it's important to get yourself on a course first, before you start looking into the funding. This also applies to another source of finance: research councils. Most of the seven member councils of Research Councils UK award their funding to universities, which then distribute the funding to students.

The Arts and Humanities Research Council (AHRC) plans to move towards this type of funding by 2009. But it still operates an "open competition" system – where individuals receive support directly from the council – and will continue to offer studentships after the changes come in. Applicants gain their place on a Masters course and are then, with the support of the university, entered for an AHRC scholarship.

Two kinds of scholarships are available at the AHRC: the professional preparation Masters scheme, and the research preparation Masters scheme, the latter being for those who intend to pursue further research after completing their Masters. Competition is fierce: although a 2:1 is required, only those with a First stand a real chance.

"The universities will want to put the highest calibre of student forward," says Jessica Bacon, programme manager at the AHRC. Scholarships are decided by panels of eight to 11 academics, across a range of eight arts and humanities-related subject areas.

The panels will be scrutinising each application. "They'll be asking questions such as, 'Is the student fully prepared and equipped to do the course? Is it the best place to study that course?'" says Bacon, revealing just how important course selection is when it comes to getting funding for a Masters course.

The financial rewards of an AHRC scholarship are obvious: all course fees paid plus a stipend of £8,800 for research preparation, or £8,200 for professional preparation. But when the competition is so tough, it's the kudos that comes with having the AHRC seal of approval that really counts. "It's a kind of status symbol in a way. It's an indicator of high quality because it's a competitive system, and students are right to feel proud of it."

One such student is Lydia Mulholland. Thanks to AHRC funding through the research preparation Masters scheme, she was able to start a Masters in fine art at Aberystwyth. Focusing on experimentation in digital photography, it was important she had the best materials – and was able to do so with the funding. "Without the support from the AHRC I couldn't have done it," she says.

If, like Mulholland, you have a specific professional interest, it's also worth checking out what the sector skills councils have on offer. For instance Skillset, the sector skills council for the film industry, offer bursaries to individuals who have financial need and wish to study accredited Masters courses in screenwriting, film-making, directing and cinematography.

On the Masters courses with the Screen Academy at the National Film and Television School, almost all home students receive a substantial financial support package – many also earn scholarships.

"The UK film industry is known for the quality of its workforce and this programme maintains a highly skilled workforce," says Dan Simmons, campaign manager for film at Skillset.

"We make training accessible and affordable to make film school a realistic option for people who couldn't usually afford it."