To encourage DD to take full student loan to enjoy life?

[creamykayak]

DD is off to a top uni and is aiming for a high paid career, so will end up having to repay her student loans.

She can take a fees loan for £28,000 which she has to do.

We can afford to pay her living costs, but she is eligible to borrow £8,000 for living costs.

She’s going to end up with £28k debt with high interest, AIBU to suggest she does take the full £8k, to end up with £52k debt before interest. I mean the interest racks up so quickly she doesn’t have much chanve to pay it off unless very very successful or until family money comes down to her.

It would mean that she’d be less stressed about working to suppliment any other spending than the basics. It’d also relieve us of a bit of pressure knowing the net is there.

Her course comes with quite some considerable travel costs and it could go to this.

‘Worst comes to it’ she could put it in the bank and use it to buy a car/ deposit/ pay for a postgraduate course.

After her 3 year course we won’t be willing/able to support her at the same level of board.

WWYD???

Is it all or nothing? Could she take say half the loan this year, and see how she gets on?

exactly that - student debt isn't debt in the true sense

I’d take it.
I’m assuming you are in the U.K.? Where we don’t have to pay it back till we start earning over 21000?
Nothing really left to lose. That what I did no regrets and uni is experience rapidly in areas where top unis are, she will need the money.

It's only a tiny percentage of people who repay it in full.
If she is eligible, why not. With today's living costs and the way it is repaid back, she will be fine.

I take the full amount even though I dont need it to live on as I get financial contributions from my parents that would easily cover my monthly costs. The way I see it, I'm never ever going to pay it all back, and since repayment is taken directly from your salary if you're employed, I'm not going to know what it would be like to be on a slightly higher salary if you see what I mean? That'll just be my normal, it's not like I have to feel the pain of actually paying the money back to them.

Its a good opportunity to use it to buy expensive staples that'll last for your career - good laptop, workwear wardrobe (If you wont change size) etc. And like you say, it's much nicer than having to stress about working whilst studying.

I would say definitely take the full amount for first year, and if by second year it turns out it was a bit of a stupid idea and she just blew it all on takeaway, get a lower amount based on what her second year outgoings might be.

I wish I hadn’t taken student loans in the same position - it’s a huge whack to pay back each month once you’re earning more (£250 a month for 50k earners) and because we’re in London I needed that £250.

Unless she wants to use it as a house deposit? That’d be the only r

@Heartbrokengirl14
25k now

I wouldn't assume that her aims to get a high paid career will necessary come true and should be a factor in this. I know of a number of recent graduates from good courses at good universities who haven't ended up highly paid. In fact a couple have chosen lower paid careers.

I would teach how to do a budget and calculate her living expenses and work out if she ends a loan / how much she needs.

A realistic budget is great advice - but I'm not sure it's something you can really plan in advance. It'll depend on so many things like availability of online books, how many societies she joins, which supermarket is closest, etc. So that's why I'd suggest take the biggest possible amount for first year, don't go mad with it but live happily and comfortably, and then over the summer into second year work out how much you spent, whether anything was a bit extravagant, recalculate for next year and then take that amount of loan plus a bit extra for emergencies.

What interest rate will she pay it back at?

I would. Assuming it’s similar to how mine worked where I pay back about £120 a month on a £36k salary.

This is the interest rate set up at the moment but it could change by the end of her course.

Tell her to take every penny she can! It really isn't the same as any other 'debt.

She won't have to start paying it back until she's earning at least 21k (I'm sure I've heard this is going up to 25k). Even then, it's only 9% of your earings over the 21k mark.

So if you're earning 25k. You have to pay 9% of 4k.
£360 a year or £30 a month!

The debt gets wiped off after 20 years.

Take the full amount.

I don't see my student loan as a debt but as a graduate tax of 9% 🤷🏽‍♀️ no one ends up paying it back I'm sure

Tell her to take it and save half!

Take it all , unless an extremely high earner it makes no difference if her debt is 20k 50k or 70k . The amount paid back will be the same.

It us stupid to borrow money at interest if you don't need it. Unless it will affect her success in her studies/her ability to network etc I don't see why she would borrow instead of getting part time work.

If she's in the UK take the full loan. She's unlikely to fully pay off her loan because of the interest unless she's starting above £35k. See the calculator here www.moneysavingexpert.com/students/student-finance-calculator

Take it. It’s not real debt, it’s a graduate tax. If she takes £2000 or £8000 her repayments will be the same because they’re worked out on your salary not the amount you owe. Hardly anyone will pay theirs back, it’s a silly system.

University is bloody stressful, if she doesn’t have to get a part time job as well and can get involved in sports and societies instead she’ll be richer for it.

In my experience part time work in first year can be hard to find, and is also often all year round instead of just term time which will decrease the amount of time she can come home for holidays. By second year you usually have more know how of where to find the good term time jobs on campus and how to secure them. So it's not always as easy as relying on being able to secure a good part time job, it depends where you are. Many top unis heavily discourage part time work too, so even less opportunity.

If she's in the UK she should take the full loan, she won't start to pay back until she's earning over £25k. It's honestly not a real debt and I treat it as an extra tax and tbh I barely notice it anymore

The rules on loans have changed quite alot since the 9k a year fees came out.

I am glad I went to uni later. As its worked in my favour.

I have 67k student debt. And pay around £27 a month back on a salary of £35k

The repayments are alot less than they used to be.

You also dont start to pay back until you are earning over £23k a year. (It might even be £25k now!) So the threshold has increased also.

This is beside the point I realise but those interest rates are absolutely outrageous in these times of extremely low rates (which are still falling constantly).

I took the full loan in my final year many years ago and have never regretted it. I do think that it made my life much easier/happier at the time too, which gives me something good to look back on. When you’re broke, a relatively small amount can make a big difference and relieve you of many hours of minimum-wage work to be spent on studies and friends.

I don’t trust the government one iota. They have already been underhand in making changes to terms. If I can prevent my child being at the mercy of unknown and changeable terms on a large debt, I will.

I took the full loan though I didn't need it and it contributed to my property deposit some years later.
However, the repayment terms are tougher now so not such an easy choice to make.