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

[awsedrftgyhujiko90]

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

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????

You must be so proud to have a daughter who has worked and saved for uni! I have never heard of a teen doing this , you have obviously raised her well .
As for the loan , don't worry she seems to know what she is doing .

Hmm figment, remind me again which party began the wholesale privatisation of the English education system by freezing grants, introducing fees, bringing in PFI contracts for school building programmes and introducing the Academies programme...
Oh yeah 🌹

"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."

I think you are allowed to pay it back early though aren't you? I agree about the unpredictability of the next 30 yrs!

I'm going to University this autumn. I'm taking the loan and I don't give two hoots about the interest or the paying it back.
The degree I am undertaking is very vocational and I have a good chance of earning around 24k starting salary. The most I can realistically earn at the moment is around 14k (minimum wage)
Its a good investment as far as I'm concerned.
I will be advising my children that if they go to university they should choose their subject wisely.

Good luck Dona

It shows how things have stagnated though. I graduated 20 years ago, and a starting salary was £24k.

I'm not going to debate the ins and outs of the loan, but regarding the interest rates (I can see some movement politically on this btw - watch out for the Autumn statement), but I do want make sure people understand that the 6% interest rate applies to the loan while they're at university, BUT AFTER ONLY WHEN THEYRE ON £40k+.

A graduate on a salary of say £24k will be charged 3%. The interest rate charged, as well as the repayments, is income dependent.

Can anyone tell me what the household income threshold is for the maintenance loans? Iv had a google but can't find much

phil it won't be about the historical recollections of oldies like you and I though. I will be about the lived experience of today's graduates as they move through life saddled with this huge debt and these interest rates. UCU commissioned a recent study on this, pointing out how many middle earning graduates will be pushed into the highest tax threshold as a result of this extra 9% in their 30s and 40s.

It is also very odd that a government policy should be sold on the basis of 'not to worry - you'll never have to repay it because you won't earn enough'.

And who trusts this government to adjust the salary threshold for inflation when it comes, especially given their attitude to interest rates?

This is a bad business which will have political repercussions for years to come.

I agree, however, it is both sides of the political spectrum that have pushed this agenda.

It seems like a very complex issue, the moneysavingexpert has a good write-up and a calculator. A little playing with their calculator leads me to the conclusion that I'd head towards one extreme or the other, either borrow nothing (which we can easily afford) or borrow the maximum, because that increases the chances of not having to pay it all back.

www.moneysavingexpert.com/students/student-loans-tuition-fees-changes

Not the cheapest loan she'll ever get. It's 6.1% interest. I'm gritting my teeth accepting mine

Odd but it doesn't work like that , the interest is irrelevant. If you pay back say £50 a month , you pay back £50 a month. Makes no difference if the interest is 1.2 , 6.1 or 18.9 , you pay back the same amount and only for 30 years max.

It's not a bad idea, as long as she does save it. Also keep in mind that Chem degrees are very full on and require a lot of in-class/lab and independent study time, so while it's admirable she plans to keep working during degree, in reality she may have to drastically cut/give up work at some point during the degree. So taking the maintenance loan is a good insurance policy so she doesn't feel pressured to work at the cost of her grades.

It shows how things have stagnated though. I graduated 20 years ago, and a starting salary was £24k

@PhilODox graduate starting salaries did not increase for EIGHT YEARS after I started work at my firm. Then they reduced all the grade salary bandings so you took the 'hit' on your next promotion. So if you went from assistant manager to manager and the old manager banding was 45-50 it was reduced to 40-45 for newly promoted managers. The real salary cost for my firm has gone down.

The government student loan website says that you can pay it back early

Can those of you saying it's not possible to do that please tell us if there are catches which stand in the way of paying off early?

Makes a big difference to the attractiveness of the loan

www.moneysavingexpert.com/students/repay-post-2012-student-loan

This is also a good link. It's obviously best not to take it at all but if she's already taking tuition fees then she may as well take the max of everything she can.
The only thing that worries me is that the government can change the terms but it's a gamble I'm willing to take, as I have to gamble for £27k anyway.

My student loan is plan 1, so I pay 9% of my gross earnings over £17,775. It will be written off if there is outstanding debt when I reach 65, and I can make extra repayments at any time. For pp who have said you can't pay plan 2 loans off early, that's not what the SLC website seems to say- who has informed you otherwise?

Yes, definitely use a help to buy isa

To all the posters who referred to me in their posts, me having to pay back student loan in order to get a mortgage:

I think for my DH and I, it is because we were buying somewhere in London that was absolutely at the extreme top end of what we could afford (we didn't have any other options, otherwise we'd have ended up with a rabbit hutch to live in!)

The bank probably shat themselves, and wanted to make sure they weren't setting us up to fail.

I just wanted to let others know of our awful experience, as I would hate for others to go through what we did - especially if I thought they were taking out a loan to help with their deposit.

Here's the research paper on the impact of student fees on lifetime earnings and taxation commissioned by UCU:

londoneconomics.co.uk/wp-content/uploads/2017/07/LE-Impact-of-student-loan-repayments-on-graduate-taxation-FINAL.pdf

The first finding is that "in terms of loan repayments (in real present value terms), there appear to be incentives to pay off student loans early – or not at all – but being positioned in the middle of the earnings distribution appears to offer the worst possible financial outcome from the individual’s perspective".

I'm confused about all this. My dd is a mature student, (32 years old) due to start university in a couple of weeks. She had a city career which meant she could buy a place of her own and has all but paid off her mortgage. She's now had a chance of career and is doing this her first degree.

The degree she's doing is career specific which means she should be on a starting wage of at least £40,000 when she qualifies. She has applied for the tuition loan, and I had agreed to fund her living costs for the duration of the degree as she will not be working and thus have no income. Would it be advantageous for her to apply for a maintenance loan too? I can't get my head around it.