AIBU to ignore Money Saving Expert advice?

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.

If you look at it as a graduate tax rather than a loan, that might help. Would you pay your income tax bill in a lump sum if you had the money? It doesn't count as debt in the same way a regular loan or mortgage does. I'd keep lump sum savings for a mortgage as you get better rates the lower your loan-to-value is i.e. bigger deposit = better mortgage.

To put it another way, if you take out the loan initially despite having funds that make doing so unnecessary, you have a choice whether or not to have a loan in the long term, a choice you can make when you have more information.

If you don't take out the loan, you are irreversibly choosing one option before you've gathered some of the information that will tell you which option is best.

I would look at this really carefully and not through the lens of the generation that went to uni in the 90s and 00s. The logic around graduate tax and it being written off eventually does hold for lower earners. Where it gets expensive is those who earn in the middle - who do end up paying a lot back over 30 years as the gap between the threshold and their earnings widen. The interest rate isn’t that competitive (between 3% and 6%) and it can feel like a huge chunk of money missing each month from a £50k wage for a 40 year old who has kids, a house and all the crazy COL stuff going on down the line. Of course you can live without that cash every month, but it hits much harder for middle earners for home the 9% chunk is significant over a very long period.

The MoneySaving expert advice I saw last year was that someone in this position should take out a loan initially, then once they start their first job, and can begin to predict if they will be high-earning enough to have to repay their whole loan, they can pay it off then, if it makes sense.

Agree with Martin Lewis all the way. My understanding is student loans are a different kind of debt. The amount you owe and any increasing interest is in most cases irrelevant. You could have a debt of millions but what you pay back will always be linked to what you earn.

Some very high earners may end up being better off paying it off in full rather than chipping away at it over the course of their careers. You'd have to work out what you expect to earn against the repayments.

As far as psychological stress goes, generally people don't think of tax and NI as a never ending debt. And they are paid in the same way.

That's fine, if that's how you want to work things personally.

But it's bad advice to discourage any and all forms of credit and debt.

Well, if you like those kind of arrangements fine - but it put me off for life, I've never had credit from anyone else, and life's been fine - its not how I want to roll.

And, with strict affordability checks no longer a thing, they are even less of a concern for lenders now than they were.

Someone trying to get a mortage with 20k in savings and a student loan is going to have a far, far easier getting a loan than someone with no savings and no student loan.

But that's not a good lesson.

There is nothing wrong with debt and credit as long as it is managed properly. My credit card, for example, makes me money, gives me consumer protections and allows for me to budget across a month.

A student loan gives people the most favourable terms of any loan they will ever had. Sacrificing savings because of some fear of debt is just daft.

My student loan, back in 1999, so nowhere near as costly as today, taught me never to take any kind of credit - I paid it back as soon as practicable, started a business and have watched that grow and grow.

I have never had anything further to do with money lenders, credit cards, supplier credit, nah, pay for it or don't have it.

That's what SL taught me!

I mean they don't get taken into account on a credit check. So they're not weighted in the same way as e.g. car finance / credit card debt etc.
Student loans are deemed an outgoing, not a debt.

It may depend on what they do at uni. My DD is an OT, a NHS degree so her student loans were only around 6k she had it paid off in a couple of years and now 5 years older is just about to buy her own house

Really depends how much they earn , my dd doesn’t earn enough to pay anything back and lives at home so has minimal expenses. My ds however earns an ok wage and flat shares his job is also commission based so some months he will have £300 + taken from his wages so if I could afford it I would pay his debt off or a big chunk of it .

It definitely is taken into account my mortgage companies!

Yeah I don’t really get this because people don’t seem to take into account that a student loan will be taken into account when they eventually apply for a mortgage (as it should be - obviously money going towards repaying a student loan is money that can’t go towards paying a mortgage or other living costs). But not something I’ve looked into since DD is still some way off university!

But it isn't classed as a "proper loan" ... Even by mortgage companies! It really isn't like being in debt, it is definitely more a 'graduate tax' as PPs have said.

If there is no other chance of a contribution towards a house deposit for them I would leave the funds alone and get the loan. If it is in addition to a house deposit contribution then avoiding the loan is clearly the way forward in my view. But chunk towards a house deposit should be prioritised if it is a choice.

The interest rates quoted in that article (5.4%, 6.3% and 8%) are all higher than current high street bank mortgage rates (around 4%) - which would suggest student loans aren't the cheapest way to borrow money?
Perhaps an important difference is that your student loans get written off after 30 years? (Although you'll be paying for it for 30 years, which is longer than most mortgage lengths)

What are the interest rates vs. the interest rates on where the money is being saved? If the money isn’t in an investment vehicle making at least 8% then you’ve got bigger problems.

It’s a good time to teach them they shouldn’t necessarily make financial decisions based on feelings.

https://www.theguardian.com/money/2026/jan/23/student-loans-graduates-plan-2-interest-rates

This really makes me think about whether we should try to pay our DR'S tuition fees.

Also, on top of the tuition fees, they're going to need at least £10k per year to live on. Can you afford that too? If not, they will still have to borrow.

If you take the loan it can still be paid off with a lump sum later. So if they have major regrets around taking it then they can use the funds later. Taking the loan leaves then with more options than not taking it.

Plus you only have enough to cover two years fees, not the entire course and living expenses so they'll be taking a loan anyway. The payments won't be lower just because it's a smaller loan (since it's a % of earnings) so they wouldn't see any impact in repayments to start with but will definitely notice the impact of not having the trust fund to fall back on.

There isn't stress attached to student loans any more than there is to tax or national insurance.

If you had a very big pot available then yes, avoid it.

But if they only have around £18k that's much more useful for a house deposit or if they need a car for their first graduate job. Or if they want to take additional courses that don't qualify for student loans. Some post grad certificates and diplomas don't. I took a vocational PG cert essential for my industry. Those who had to take graduate loans through the bank had really tough repayment schedules.

You can always make a lump sum payment on graduation if they don't need the money for other purposes but I'd take the student loan and keep the options open.

And leave them with a bigger higher interest mortgage loan instead? Which always has to be repaid regardless of job situation? Daft.