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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:
roundaboutthetown · 07/09/2017 21:07

Anyone relying on government promises for 30 years when they don't have to is a nutter...

Worriedrose · 07/09/2017 21:08

I'm sorry
It's a good loan because (in my case) it's 1% above base rate
It's taken from PAYE
If I don't work I don't pay
It goes away after 30 years if I don't earn enough to pay it
IF i earn under 18k I don't pay

ANYONE tell me that's not a good deal for a loan
I'm not talking about anything else I am talking about a LOAN

Gardengeek you are going to pay back 70k on a 30k loan?!

Rpi is currently 3% above base rate which is a pretty good deal considering the caveats

Worriedrose · 07/09/2017 21:10

Gardengeek
I can think of more demeaning things!!!
Christ

OublietteBravo · 07/09/2017 21:10

When my DH and I were taking out our mortgage, we were told we had to pay back every penny that we owed on our student loan for them to give us the mortgage!

They were talking nonsense, how would they ever know how much loan you would pay back over 30 years.

Not necessarily. The really old student loans (from the 1990s) were designed differently. Once you were over the repayment threshold, your monthly payment was set such that the entire loan was paid off in 5 years. This meant you could have high repayments on a relatively low income (mine were £123 a month when my take home pay was only about £1000 a month).

Out2pasture · 07/09/2017 21:12

personally it's a horrible plan the idea of never paying it back (knowing you owe it) is despicable.
it's a debt and only gets you use to debt, credit card debt will be next.

Sukitakeitoff · 07/09/2017 21:15

It's not despicable, that's the system, the terms of the loans. The government designed it that way!

OublietteBravo · 07/09/2017 21:15

(The really old student loans weren't collected via PAYE - they were paid via direct debit. Mortgage lenders treated them as a normal loan).

Ta1kinPeece · 07/09/2017 21:19

THe really old loans were also for tiny amounts at trivial interest rates (the one on DH's loan was negative for a while)

titchy · 07/09/2017 21:20

I don't regard it as despicable. I regard the Government not funding university education as despicable...

GardenGeek · 07/09/2017 21:23

This reply has been deleted

Message withdrawn at poster's request.

senua · 07/09/2017 21:24

It's not despicable, that's the system, the terms of the loans. The government designed it that way!

It's immoral. The system was designed so that the poorly paid were not burdened with never-ending debt. It was not designed to give the comfortably-off a house deposit.

OublietteBravo · 07/09/2017 21:25

They were linked to the RPI. Bloody difficult to defer mid-year though. I ended up having to pay £123 a month when I was on SMP until I could provide 3 months worth of payslips proving my income had dropped below the repayment threshold. That wasn't much fun.

OublietteBravo · 07/09/2017 21:26

That had a form you could fill in to defer if you were in prison, but they didn't have one for maternity leave...

Brakebackcyclebot · 07/09/2017 21:26

very sensible idea! She is indeed good with money. She can make money with it by investing it perhaps, and end up with far more than the £8k per year she's allowed to take.

Toblernone · 07/09/2017 21:29

Even if it's not the cheapest loan you'll ever have it's absolutely the best terms you could ever have, only pay as you earn and have it written off if you can't get it all paid off by the end! Plus don't forget the practicality that even if she does become a huge earner she's having the money when she's comparatively low income and paying back ONLY when she's high enough income not to care too much, could mean a huge difference over a lifetime in terms of affording a house earlier, not getting into 'bad' debt when young etc. Worth taking imo.

roundaboutthetown · 07/09/2017 22:32

A loan is not generally worth taking if you don't need a loan, especially if you are then stuck with it for 30 unpredictable years wihout being allowed to pay it off early. Last I heard about student loans, the student finance company and HMRC don't communicate effectively and people are paying off more than they owe, anyway. Why saddle yourself with all that admin and stress and general incompetence for something you don't need and which they won't let you pay back on anything but their own obscure and changing terms over an incredibly long time?

Ttbb · 07/09/2017 22:44

Tell her to buy Boeing and Nike stocks. She can open a Hargreaves Landsdown account on the internet and do it herself. She'll make the interest back and then some. With current interest rates you loose money if you keep it in a savings account.

Quittingthyme · 07/09/2017 22:46

The loan is not the cheapest she will ever have!!!

BanjoStarz · 07/09/2017 22:52

All these people saying there loans are going to be wiped after 30 years - which plan are you on?

When did you start and graduate?

I've got scuppered as I was the last starting year that keeps paying it back until retirement rather than getting it written off at 25 years - now that's unfair!

Figmentofmyimagination · 07/09/2017 23:07

Garden Geek is the one talking sense on this thread.

I wish I could fund my DDs' fees and maintenance upfront - the new social divide. They are not actually borrowing £40k. It's actually more like £100k, by the time you add interest over 30 years. And every move you make - taking time off, maternity leave, moving overseas, etc etc must be reported promptly to the student loan company for the rest of your working life - or else they impose penalty interest rates and the debt grows even larger.

So many things wrong with this. Corbyn is on to something - higher education is a public good that a civilised country would fund out of general taxation.

PhilODox · 07/09/2017 23:14

I'm with gardengeek on this. If you end up earning a reasonable amount, you're going to be paying through the nose for your 'loan'. At 6%, it's extortionate considering the base rate and mortgage rates currently.
I'd do almost anything to avoid my children needing loans for university in Britain. (Though the system may change before they're that age). I'm completely opposed to a graduate tax too (which is effectively what this scheme is). We need a well-educated populace.

Firewall · 07/09/2017 23:21

Very clever! Save it and use it for her house deposit and lower the amount she will have to borrow in mortgage. I know many people who have done it. I even know a medical student who did this as odds were she would never pay the full amount back even on a high salary as she is planning on having kids eventually and working part time and taking full advantage of maternity leave. Whereas a mortgage has to be paid back regardless. She ended up with a decent chunk to put on her house and managed to buy one a couple of years ago after graduating as unlike the rest of us she managed to save the loan for a decent deposit.

Figmentofmyimagination · 07/09/2017 23:22

It's the next miss-selling scandal waiting to happen IMHO - and the Conservatives' graveyard - if they survive brexit. What middle income person, tied to paying 9% over £21k on their income for the next 30 years - in their face every single time they see their pay slip, every irritating, dictatorial, petty letter from the student loan company, is ever going to vote conservative?

LouHotel · 07/09/2017 23:34

If she can live without spending it her best choice is too take the lone and put it in a young persons isa earning 4% interest then use it towards a house deposit (this is what i did)

LouHotel · 07/09/2017 23:35

But to be fair im on the old fees so less risk of overall debt.

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