AIBU to ignore Money Saving Expert advice?

20k in accessible cash is far more useful when you are starting out. That's why.

Thats exactly what we were sold. And it’s the complete opposite of that. I think I am on something like 6 or 7% interest atm.

In my whole adult life it has by far been the most expensive loan I have ever had by a factor of c. 300-400%

And I am a lucky one on quite ‘favourable’ plan 1 terms.

Rachel Reeves is changing this so I would read up on student loans very carefully before taking strangers advice on here

The plan 2 loans are terrible on interest, I would hate to have that hanging over me. DD1 will have a latest plan loan which is different but I can see your point of not having it hanging over you.

The fact that the goalposts could move on thresholds and interest rates over the 40 year payback term is also a consideration.

I expect they will take the loans at the start. As many have said that then gives them the freedom of choice. We have sat down and talked about pros and cons.

I’m a single mum and had a period where money was tight, I’ve learnt that you never know what tomorrow will bring which is also why such a long term loan/debt/tax make me uncomfortable.

It’s great to hear everyone’s perspectives so thank you all for taking the time to contribute. It has been very helpful.

university is all about learning. Not just academically but also independence and life skills, especially budgeting shot and long term. This is the first real debt they will have but unlikely to be the last in their life. Learning to mange this practically and psychologically will set them up to fully adult the rest of their life in my opinion.

Although mine was old style I took it and saved it and worked at least 20 hours term time and often 60+ during all holidays. It gave me options of travelling when I graduated, having better options for housing when first started work and I ultimately bought a whole house in London at 26 instead of paying off the loan. I’m in my 40s and I still maintain it taught me good money management.

My DC has taken out the student loan but is working too and aims to pay a big chunk off when he graduates. He took out the maintenance loan in the first year but has repaid that but already and didn't need it for year two.

If you do the numbers of expected earnings in 5 years. 10 years etc and how much they'll pay over the next day 30 years it's a massive amount compared to the £30k they leave with, assuming 3 year course. If they can settle the debt quicker and save interest, why wouldn't they?

My DC’s dad has paid for their uni. The interest is really high. DS has graduated and is a trainee actuary so will definitely make enough money to repay all the debt. He didn’t think it made any sense to pay the interest when he had the money. House deposits - DS and his gf are saving for a deposit, they are living rent free at moment in ex’s house as he is overseas. Ex may assist with a house deposit, but if not, they are saving. I personally think not having student debt is a good thing if family are in a position to help.

Exactly. Bad housing/annoying neighbours/stress of moving has caused me far more "psychological stress" than my student loan ever has! The vast majority of their peers will have student loans so they aren't at a disadvantage, whereas if lots of their friends start getting money to help with deposits they might feel hard done by.

Also what if they drop out or never earn enough to pay back their loans? Then you will have lost out by paying upfront. There's always the possibility the government will forgive/wipe out some student loan debt at well - they took £1000 off both of my siblings for some reason.

Although it's called a "loan" it is structured effectively as a graduate tax that those who fully self-fund can opt out of.

I don't think there's much "psychological stress" and doesn't make much difference to most young people. Psychologically it feels more like a tax than a loan which is half way between the basic income tax that everyone pays and the higher rate tax that the higher earners pay.

On a salary of £39k ish (uk average salary) with no student loan the take-home each month is £ 2,524.10 per month after Tax, NI and a 5% pension contribution but no Student Loan repayment whereas with a Student Loan the same person would take home £ 2,419.10 per month - a £105 difference really isn't that much whereas the difference between the rent that someone with no access to the housing ladder has to pay vs being able to get a mortgage for the same level of housing will often be several hundred pounds - but if this Trust Fund is only enough for a couple of years and any loan is needed, they will still pay that same £105 per month whether the debt is £10,000 or £70,000 so unless you can top up the Trust Fund to pay for full living expenses and fees throughout the course, there's not much benefit.

It does make a bit more of a difference with a salary of eg £90,000 where Take Home without a loan would be £ 5,119.71 and with a loan would be £ 4,632.71 so that's a difference of nearly £500 but how confident are you that your DC will be earning at that kind of level? (top 5% of earners) meanwhile if one of them ends up not earning much (eg if they are a SAHP or work part-time due to childcare) they would pay very little or nothing, and you can't be sure.

If you have enough spare capital yourself that you can cover the shortfall between the Trust Fund and the full cost, and if you are reasonably confident that your DC is heading for a top-5% career then my advice would be that you start off with taking the loan but wotj you paying the accruing interest off right from the start (interest is charged from Day 1 of the course so a lot accumulates during the years of study) so that the debt doesn't grow. Do that until 3 years after graduation by which time it should be clear whether they are being successful and are genuinely on their way to stellar salaries or whether they are closer to average. If the former, then releasing the trust fund at that point and paying off the remaining debt would be sensible. If the latter then using the Trust Fund for a house deposit and paying the repayments as a graduate tax will save more money.

Yes. They are up to Plan 5 now and they all have different T&Cs. Also what you pay back massively depends on how much you earn. What was right in the past might not be best for future students.

But what has changed with the current plan is far more Plan 5 graduates will pay theirs off compared with those on previous plans. Even though the interest rate might be lower, the cost for a typical graduate has nearly doubled and hardly anyone has noticed.

As to whether it's right to take the loan depends on many factors, many of which are unknown. Get it right and it could save you tens of thousands. Get it wrong and you could be throwing tens of thousands away, especially if you pay fees instead of taking loans and your DC stay in low paid careers or spend an extended period as a SAHP etc.

Hi OP, my view is that although it’s a cheap loan, it’s still a loan. I’d pay it off so it’s one less burden for them as adults.

Although it's called a "loan" it is structured effectively as a graduate tax that those who fully self-fund can opt out of.

I don't think there's much "psychological stress" and doesn't make much difference to most young people. Psychologically it feels more like a tax than a loan which is half way between the basic income tax that everyone pays and the higher rate tax that the higher earners pay.

On a salary of £39k ish (uk average salary) with no student loan the take-home each month is £ 2,524.10 per month after Tax, NI and a 5% pension contribution but no Student Loan repayment whereas with a Student Loan the same person would take home £ 2,419.10 per month - a £105 difference really isn't that much whereas the difference between the rent that someone with no access to the housing ladder has to pay vs being able to get a mortgage for the same level of housing will often be several hundred pounds - but if this Trust Fund is only enough for a couple of years and any loan is needed, they will still pay that same £105 per month whether the debt is £10,000 or £70,000 so unless you can top up the Trust Fund to pay for full living expenses and fees throughout the course, there's not much benefit.

It does make a bit more of a difference with a salary of eg £90,000 where Take Home without a loan would be £ 5,119.71 and with a loan would be £ 4,632.71 so that's a difference of nearly £500 but how confident are you that your DC will be earning at that kind of level? (top 5% of earners) meanwhile if one of them ends up not earning much (eg if they are a SAHP or work part-time due to childcare) they would pay very little or nothing, and you can't be sure.

If you have enough spare capital yourself that you can cover the shortfall between the Trust Fund and the full cost, and if you are reasonably confident that your DC is heading for a top-5% career then my advice would be that you start off with taking the loan but wotj you paying the accruing interest off right from the start (interest is charged from Day 1 of the course so a lot accumulates during the years of study) so that the debt doesn't grow. Do that until 3 years after graduation by which time it should be clear whether they are being successful and are genuinely on their way to stellar salaries or whether they are closer to average. If the former, then releasing the trust fund at that point and paying off the remaining debt would be sensible. If the latter then using the Trust Fund for a house deposit and paying the repayments as a graduate tax will save more money.