Firstly,
The government loan is a great tool, but you can still apply for school funding, you're right, this will mean he will not be able to get funding from a UK research council, but they still have other options.
Also to mention, the idea of school funding is that you can afford to live of it, most PhD's take-home £1200, which is more difficult in London.
The loan could be useful if he goes on to get a fees only scholarship or something, but yes, by itself its pretty useless.
If you try and get school funding, this usually means you agree to around 100 hours of unpaid teaching per year.
If they just get the loan, or Research Council funding, or any other funding not from the school, expect to earn around £15-£20 per hour for teaching. A bad thing about this is that you do not get paid any prep time, which is generally needed as an early stage PhD still coming to grips with the subject.
The website I found my funding from was jobs.ac.uk it gives lots of options and representative examples.
As a last resort, there is also bank style loans for PhD students.
Addition:
You will not be able to get a Postgraduate Doctoral Loan if:
- you’ve received or will receive Research Council funding (for example, studentships, stipends, scholarships and tuition fee support)
- you’re receiving a social work bursary
- you’re eligible to apply for an NHS bursary (even if you’re not receiving it)
- you’re already getting payments from student finance for another course that you’re studying
- you’ve received a Postgraduate Doctoral Loan before - unless you left your course due to illness, bereavement or another serious personal reason
- you already have a doctoral degree, or a qualification that’s equivalent or higher
- you’re receiving a doctorate by publication
- you’re behind in repayments for any previous loans from the Student Loans Company
- Your course
So from what I read here, he will only not be allowed the loan if he gets research council funding, so he still could get school funding!