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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

AIBU to ignore Money Saving Expert advice?

218 replies

Lookingafterthepennies · 31/01/2026 21:46

Has anyone regretting taking out student loans rather than using savings to cover tuition fee costs?

My children are in for fortunate position of having an amount equivalent to over 2 years worth of tuition fees in their trust fund accounts. I understand it makes more financial sense from a numbers point of view for them to keep that money invested and use it for eg a house deposit in the future, and take out tuition loans, but the idea of them having to pay back a debt for most of their working lives makes me feel a bit sick.

So AIBU to think the psychological stress of having a never ending debt is worse than the the benefit of having a big chunk of money to use for something else.

YABU: it’s fine, you accept the debt and it doesn’t really phase you

YANBU: the never ending dent in the pay packet due to loan repayments is demoralising and should be avoided if poss.

OP posts:
MadBlack · 31/01/2026 21:49

It's the cheapest loan they will ever have. Paying it off (or not taking it out in the first place) makes no sense at all

Fleur405 · 31/01/2026 21:50

I had a big student loan and it took a long time to repay. Did I like it? No. Did it cause me “psychological stress”? No. Repayments are tied to earning. So the less you earn the less you pay. In contrast, the less you earn the less money you have to say, save for a deposit. I think you’d be mad to do this.

Downplayit · 31/01/2026 21:50

Definitely save it for a house deposit. Try and see a student loan as more like a graduate tax. They only repay small portions according to their earnings. It may also make them take their studies more seriously if its not being handed to to them on a plate. When they want to buy a house saving £20k for a deposit will be incredibly hard so I feel like the help is more impactful at that point.

NemesisInferior · 31/01/2026 21:51

Using savings to pay for university rather than taking out a student loan is utter, utter madness.

Maray1967 · 31/01/2026 21:54

Save the money for a house deposit. Our DS treats his loan repayments as a graduate tax. Having some money to supplement what he saved helped him (and same for his GF) buy a house at 24. It wasn’t a huge sum in our case, a few thousand, but it got him to the ten percent deposit. There was no sense in using it to pay off some of the loan.

PotteryChuck · 31/01/2026 21:55

I'm generally against credit and loans as debt (mortgage excluded) but student loans are a different game; plus, anything not paid back after X years gets written off.

Ridiculous to spend savings rather than taking out a student loan.

RichPetuniaAgain · 31/01/2026 22:00

Hi OP, my view is that although it’s a cheap loan, it’s still a loan. I’d pay it off so it’s one less burden for them as adults.

RainbowBagels · 31/01/2026 22:03

Its basically a graduate tax. If they have to borrow £18K more on a mortgage rather than use it on a deposit they will also be paying something off for the rest of their working lives.

Notmycircusnotmyotter · 31/01/2026 22:04

The interest rate is really high though? I wouldn't want my kids to have an ever increasing debt burden.

ConBatulations · 31/01/2026 22:07

It's your children's debt not yours so they are the ones who may feel psychological stress.

As others have said it's cheaper than most borrowing and as they will have to borrow something the repayments in the early years of work will be the same anyway. If they manage to save enough pay off the full amount then they can do that at any point if that's what they choose to do.

The full loan amount is often not enough to live off so needs topping up either from work, savings or parents and relatives so the savings may be needed for living costs, rental deposit or buying a car even if they are many years away from needing it for a house deposit.

ConBatulations · 31/01/2026 22:09

@Notmycircusnotmyotter The interest rate for the latest version (plan 5) is the rate of inflation so there is no real cost. Best savings rates are currently higher than inflation.

AwkwardPaws27 · 31/01/2026 22:09

If you can pay all their fees and living expenses so they have zero loans, then great.
If not, the interest accumulate so quickly and the payments are set according to your income so the size of the loan doesn't really make a difference unless they are high earners and have a good chance of paying it off.

freudenschaude · 31/01/2026 22:15

Good question. My kids are in a similar position, one off to Uni this autumn the other 2 years behind her.

My kids both have about 60k each in a trust fund, not life changing but obviously amazing to have (came from my estranged parents who gave me an abusive childhood so I have mixed emotions on it).

Ex DH is a high earner and I’m not. DC would be eligible for a maintenance loan and my gut instinct is take the student loan and save the trust fund for an actual, tangible thing like a house deposit.

I can’t dictate as the trust basically says they get the money in their pockets no strings attached when they turn 18, but it would be helpful to be able to advise.

IhadaStripeyDeckchair · 31/01/2026 22:16

House deposit all the way.
Being able to buy your own home takes away so much stress in life - finding a rental, securing a rental, dealing with landlords that dont repair/replace items, house mates who are loud/dirty/use all your stuff.

In addition to the peace of mind & security of house ownership they will be investing in an appreciating asset.
You'd be mad to pay uni fees rather than use the money for a house deposit.

mumofoneAloneandwell · 31/01/2026 22:17

Yabvu girl

keep the money for their house deposits instead

EricTheHalfASleeve · 31/01/2026 22:24

Martin Lewis has a very good recent episode on his BBC radio show about student loans. Basically it functions as a graduate tax, and unless you are likely to repay the full amount the interest rate is irrelevant- as you won't repay the original loan amount in your working life, therefore never get to the point of paying off any of the interest anyway. If you are a high earner OR only take out a small amount of loan debt it MIGHT make sense to overpay - but once you overpay you can't get that money back, and the student loan is unique in that your payments go down if your income goes down - unlike a mortgage. You're likely better off keeping cash in savings for a raining day rather than overpaying or using savings instead of a student loan.

Short answer- you're mad to pay up front unless you are rich and can easily afford fees plus living expenses plus a house deposit. Otherwise let them take out a loan and save the cash for a house deposit.

Sophomore · 31/01/2026 22:29

I’m paying my children’s fees. We can afford it and money for a flat in the future. I think the new terms mean it’s much less clear cut which is the better option and for me the psychological aspect makes it worthwhile. But this is really just about our financial situation rather than an opinion on what other people ought to do.

MidnightPatrol · 31/01/2026 22:33

MadBlack · 31/01/2026 21:49

It's the cheapest loan they will ever have. Paying it off (or not taking it out in the first place) makes no sense at all

But… it isn’t.

The interest rate is set by RPI and the term is now 40
years. They are likely to repay it’s value a few times over, with a good but not incredible income.

Plan 2 loans have been accruing interest at something like 8% for the last few years - you need to be earning something like £65k to start repaying any of the capital on an average sized loan.

Mt563 · 31/01/2026 22:36

RichPetuniaAgain · 31/01/2026 22:00

Hi OP, my view is that although it’s a cheap loan, it’s still a loan. I’d pay it off so it’s one less burden for them as adults.

And leave them with a bigger higher interest mortgage loan instead? Which always has to be repaid regardless of job situation? Daft.

ChapmanFarm · 31/01/2026 22:39

There isn't stress attached to student loans any more than there is to tax or national insurance.

If you had a very big pot available then yes, avoid it.

But if they only have around £18k that's much more useful for a house deposit or if they need a car for their first graduate job. Or if they want to take additional courses that don't qualify for student loans. Some post grad certificates and diplomas don't. I took a vocational PG cert essential for my industry. Those who had to take graduate loans through the bank had really tough repayment schedules.

You can always make a lump sum payment on graduation if they don't need the money for other purposes but I'd take the student loan and keep the options open.

DoAWheelie · 31/01/2026 22:41

If you take the loan it can still be paid off with a lump sum later. So if they have major regrets around taking it then they can use the funds later. Taking the loan leaves then with more options than not taking it.

Plus you only have enough to cover two years fees, not the entire course and living expenses so they'll be taking a loan anyway. The payments won't be lower just because it's a smaller loan (since it's a % of earnings) so they wouldn't see any impact in repayments to start with but will definitely notice the impact of not having the trust fund to fall back on.

PriscillaD · 31/01/2026 22:43

Also, on top of the tuition fees, they're going to need at least £10k per year to live on. Can you afford that too? If not, they will still have to borrow.

saltinesandcoffeecups · 31/01/2026 23:02

What are the interest rates vs. the interest rates on where the money is being saved? If the money isn’t in an investment vehicle making at least 8% then you’ve got bigger problems.

It’s a good time to teach them they shouldn’t necessarily make financial decisions based on feelings.

HArderthan1thought · 31/01/2026 23:06

The interest rates quoted in that article (5.4%, 6.3% and 8%) are all higher than current high street bank mortgage rates (around 4%) - which would suggest student loans aren't the cheapest way to borrow money?
Perhaps an important difference is that your student loans get written off after 30 years? (Although you'll be paying for it for 30 years, which is longer than most mortgage lengths)