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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

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

76 replies

creamykayak · 13/07/2018 12:20

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???

OP posts:
happinessiseggshaped · 13/07/2018 13:05

I did the opposite and worked really hard in my second year, massively compromised in my third year on accommodation both to save money and keep loans low and now regret it. I will never pay them back, should just have had more fun, and potentially a better class of degree, if I hadn't been worried about money.

LeighaJ · 13/07/2018 13:10

Lots of people go to top universities and aim for high paying careers, it doesn't mean it will work out.

I wouldn't be encouraging her to saddle herself with more debt then necessary. If you can't afford to help her then that would be different but it sounds more like you'd rather not then can't.

speakout · 13/07/2018 13:11

What huge sums of money.

My DD is about to start a nursing degree this year, thankfully will get a bursary for that course.

QuiteUnfitBit · 13/07/2018 13:33

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.
This sums it up. The way the system is, for most people, you will never end up paying it off, so it makes financial sense to get into the most debt you can. In effect, once you owe a certain amount, any more is free money.

OftenHangry · 13/07/2018 13:38

Tbh I don't think she will get to "enjoy life" too much anyway, but it will provide her with better options. I assume her course will be quite hard (judging from high paid career) so having the chance of spending extra few hours a week on assignments rather than in a job, might pay off when she gets good grades. Also, she will be able to buy quality laptop which will last and few other better quality bits and bobs.

DSHathawayGivesMeFannyGallops · 13/07/2018 13:42

Good uni and career goals won't necessarily translate to a highly paid job after graduation.

Having said that, I wouldn't worry too much; take the loan. It comes off at source like tax and is not the same as debt.

I do agree that I don't always enjoy seeing mine come off, but you could not have a SL and buy something on payment plan, be a spendaholic and always max out credit cards or get a payday loan and be paying out the same money. Much worse forms of debt to my mind. Think for now. If the money is needed, good, if not, save it- mine is currently in savings. You can always return it. A friend saved hers and gave it back! It doesn't appear to have affected anyone I know getting a mortgage.

ColdShoulder · 13/07/2018 13:51

@DSHathaway - isn't student debt included when you apply for a mortgage? I thought originally it wasn't but then the terms changed and now it's taken into account in the debt/income ratio.

Ginorchoc · 13/07/2018 13:52

I’m about to finally finish paying mine off after many years. (Mature student occupational degree) It is noticeable from my salary but the only hesitancy I’d say is it can impact the affordability of a mortgage. It’s not supposed to but it was taken into account with my last Halifax mortgage and now Coventry.

CornishMaid1 · 13/07/2018 14:03

Why not tell her to take the full loan for the first year and place it into a separate account. If she manages without needing it then she could choose not to take the full loan in year 2. If she finds she does need it then it is there as a backup.

QuiteUnfitBit · 13/07/2018 14:10

Why not tell her to take the full loan for the first year and place it into a separate account. If she manages without needing it then she could choose not to take the full loan in year 2.
But the way the system works is, over a certain amount of loan, it will make no difference to the amount you pay back, unless you are an exceptionally high earner and will pay it all back.

DobbyisFREE · 13/07/2018 14:11

She should take as much as possible, it's horrible to scrimp and save. I had weeks where I had to choose between rent and food so uni was a really horrible time for me and I ended up leaving.

Now I'm in a well paying job and my interest rate is higher than my repayment rate so my debt is increasing and I'll never pay it off. I borrowed half as much as your DD so it really won't be any better for her. She might as well gain more from it now as she won't gain anything from not having it.

runningkeenster · 13/07/2018 14:13

Take it. It’s not real debt, it’s a graduate tax

I get what you are saying. But it affects your ability to borrow other money eg to buy a house, so it IS real debt, it's not just treated as a tax. If it were, it would be less controversial I think.

QuiteUnfitBit · 13/07/2018 14:18

But it affects your ability to borrow other money eg to buy a house, so it IS real debt, it's not just treated as a tax.
But as long as you haven't paid the debt off, you'll be paying the same amount every month whether you have borrowed £30k or £50k.

BackforGood · 13/07/2018 14:51

I'd say to take it too. She can put it in a savings account and save it if she doesn't need it, but, due to the way it is set up, she will be making the same payment (once she gets over £25K income) whether she owes £28K or £52K, so she might as well have the extra £24K to live off / save / whatever.

Original poster
creamykayak · 13/07/2018 15:18

Thanks for all the replies. Hopefully she will get that job she dreams of. It’s at the LSE not Leeds Beckett !

OP posts:
Rednaxela · 13/07/2018 15:23

But it affects your ability to borrow other money eg to buy a house,

NO IT DOESN'T!!

Our mortgage adviser couldn't give a shit and that was 3 yrs ago.

Doesn't affect credit rating. Credit card and loan companies don't even ask.

It is not real debt, it is a graduate tax with a different name, for political reasons!

ReservoirDogs · 13/07/2018 15:45

The capital amount of the student debt is not taken into account when deciding how much a lender will lend on a mortgage.

HOWEVER the amount that you pay back monthly on your student mortgage is taken into account when deciding affordability! My son is fortunate to be in a position where his 0% of his salary (above the current limit) amounts to about £290 per month. That amount is taken into account when they look at his outgoings!

QuiteUnfitBit · 13/07/2018 15:46

It might not affect your ability to borrow, but surely it may impact how much you can borrow, under new (2017???) affordability criteria? You'll be assessed as being able to make smaller repayments, but that might not be a significant amount/consideration.

QuiteUnfitBit · 13/07/2018 15:46

Cross post Grin

ourkidmolly · 13/07/2018 16:06

@creamykayak
That's a really crass and snobby comment. Nothing wrong with Leeds Beckett. Don't count your daughter's chickens and 'pride before fall' comes to mind.

DSHathawayGivesMeFannyGallops · 13/07/2018 16:13

@ColdShoulder- I don't know for sure wrt mortgages as I'm a cash buyer. I know it gets noted down, but I haven't come across anyone who has had it impact upon their actual ability to get a mortgage- but happy to be corrected. I have the same understanding as @Rednaxela though wrt to it essentially being a tax and how it is viewed.

For whoever suggested getting 2/3 years, the person I know who only had 2 years loan still struggles the most for money now 7 years post grad, and she isn't badly paid. Her mum refused to sign off on her 3rd yr loan and as a result she has hardly any savings and a permanent overdraft. She's not bad with money, but she could have done with that in the bank as opposed to wiping herself out to pay for her final year.

DSHathawayGivesMeFannyGallops · 13/07/2018 16:16

Also OP- Getting into LSE is a great accomplishment. However, I have a UL degree in a well regarded discipline & my uni is considered good for my subject. I still have a pretty average job & pay cheque. No guarantees.

I wish your Dd all the best though. Smile

Grasslands · 13/07/2018 16:19

Amazing how people who can’t afford to pay for their children’s uni give out poor financial advice to perpetuate the cycle of poverty.
Debt is debt

BackforGood · 13/07/2018 16:25

All debts aren't equal Grasslands - what a daft remark.

Employmentquestionname · 13/07/2018 16:27

Grasslands
But student loan debt is NOT like normal debt at all
and to say that it is is very misleading.
Higher education is a great way out of poverty and Student Loans allow the poorest families access to the best universities.

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