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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

AIBU to think DD shouldn't have taken out a maintenance loan?

96 replies

awsedrftgyhujiko90 · 07/09/2017 20:21

Hi, DD is starting studying at uni (Chemistry) and says she will be taking the full student maintenance loan for each year Confused

she is obviously taking the tuition loan and has worked for the last 2 years and saved 5k for food, etc. and still has her job, so will earn even more (she is staying local) but will be moving into a flat (it's owned by my parents and they have kindly said she can live there for no cost for the next 3 years as they helped out my dd1 with her accommodation).

She is entitled to the full 8k each year due to income, but she didn't need to take a maintenance loan at all. She is so sensible with money and I can't believe she decided on this... She says she won't have to pay it all back because it gets written off after 30 years? but I hope she will have a good wage.

She says the average wage for chemistry graduates is 19k and she won't even hit the threshold, so thinks it's sensible to take it?

Please tell me I'm not going mad and think it's crazy????

OP posts:
Trills · 07/09/2017 20:24

She's being quite sensible IMO.

The amount taken from her wages each month will be 9% of what she earns over £21k whether her total loan is £24k or £50k.

reallyreallyreallytired · 07/09/2017 20:26

Very sensible of her! Cheapest loan she will ever get and how does she know she will be able to work so much etc whilst she studies

Trills · 07/09/2017 20:26

(numbers might not be quite accurate there but the concept is)

The size of the loan only becomes relevant if she is going from "this will be paid back after 10 years" to "this will be paid back after 20 years", because she'll have more year with money taken out of her wages.

If it will be paid back never, then the total is meaningless.

OublietteBravo · 07/09/2017 20:26

What is she doing with the money?

I'm a chemistry graduate (I graduated in 1998). My starting salary was about £17k, and my current salary is a little over £85k.

Original poster
awsedrftgyhujiko90 · 07/09/2017 20:28

currently she is leaving it in the bank.

surely she has some form of tax on it though? i dont understand how she is better off taking it all

OP posts:
HoneyIshrunktheBiscuit · 07/09/2017 20:28

You don't get taxed on your maintenance loan

senua · 07/09/2017 20:29

The amount taken from her wages each month will be 9% of what she earns over £21k whether her total loan is £24k or £50k ...

... unless everyone starts doing this so the Govt gets wise and changes the rules.

BrawneLamia · 07/09/2017 20:29

I remember someone in my year took the loans, put them in a savings account, and used the cash for a house deposit when they graduated. It turned out to be a great plan.

GardenGeek · 07/09/2017 20:29

This reply has been deleted

Message withdrawn at poster's request.

Original poster
awsedrftgyhujiko90 · 07/09/2017 20:31

so it was a good idea? i am so confused...

OP posts:
QuiteLikely5 · 07/09/2017 20:31

Chemistry graduates can go on to earn lots of 💵

She seems sensible so allow her to spread her wings!

senua · 07/09/2017 20:31

currently she is leaving it in the bank.

These days you pay interest the moment you take the loan. So she will be charged 6% but only earn 2% (if that).

Original poster
awsedrftgyhujiko90 · 07/09/2017 20:32

sorry i meant interest... so she is paying to keep some money? how is that a good idea!?

OP posts:
AngryCasper · 07/09/2017 20:32

She's right though. Even when she earns over the threshold, the percentage you pay back each month is very small and it will get written off eventually as she says. I agree that it sounds like she doesn't really need it, but it won't have any negative impact on her later on. They're not like bank loans; I don't think everyone realises this and it puts a lot of people off going to uni, which is unfortunate.

ShapelyBingoWing · 07/09/2017 20:33

She's right that she'll likely never pay the full amount back. With that in mind, you should encourage her to put aside the equivalent of what her ren't would be each month. That's a good amount towards a mortgage deposit after 3 years. Invaluable if she anticipates remaining in an earning bracket low enough that she won't be making student loan repayments.

titchy · 07/09/2017 20:33

If she can invest it sensibly, ISA or something else depending on her risk aversiveness, it would well be a fantastic money making decision. If she saves it that's £25k house deposit she'll have on very beneficial terms.

Why do you mention tax? What tax would she be paying on it?

HoneyIshrunktheBiscuit · 07/09/2017 20:34

Student loan repayments are so small I don't even notice mine. Granted that was before the higher fees but that meant I started paying back at 18k not 21k.

Original poster
awsedrftgyhujiko90 · 07/09/2017 20:34

titchy that is what she is doing putting it in an isa account

OP posts:
Worriedrose · 07/09/2017 20:34

God the loan is the cheapest she will ever have!
She sounds remarkably clever to take it

titchy · 07/09/2017 20:35

All the loan interest rate does, whether it's 3% or 6.2%, is add to the number of years of repayment, which are capped at 30 anyway.

GardenGeek · 07/09/2017 20:35

This reply has been deleted

Message withdrawn at poster's request.

titchy · 07/09/2017 20:36

Sensible girl! House deposit for the price of a cup of Starbucks a week!

Original poster
awsedrftgyhujiko90 · 07/09/2017 20:36

oh i see

OP posts:
HoneyIshrunktheBiscuit · 07/09/2017 20:36

If she puts it in a lifetime isa and uses it to buy her first home the government will give her an extra 25%

RandomMess · 07/09/2017 20:36

My student loans ( the original ones) paid the deposit on my first home & I still haven't earned enough to start repaying them

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