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Further education

You'll find discussions about A Levels and universities on our Further Education forum.

Original poster

Self funding v Student loan, Uni 2019

29 replies

Shimy · 14/01/2019 17:14

As the title says; Is there anyone here whose DC will not be getting a student loan to finance their maintenance but will be self funding? Dh has suddenly announced dc will not be getting a loan as he doesn't want him having hefty debt when he graduates. Does this make sense? does the loan process in itself not activate the payment of the student's tuition fees?

OP posts:
StartedEarly · 14/01/2019 17:23

No point in getting a loan for fees and not for maintenance as it won't affect the repayments. You pay back according to what you earn not according to what you owe.
Martin Lewis explains it here

Lots of previous threads on Higher Education about this

GahWhatever · 14/01/2019 17:30

If you can get a student loan you should. It's a loan which does not impact your ability to get a mortgage and in the vast majority of cases is not paid back as the jumping off point is so high compared to average wages.

Even if your DC don't need the loan if they are eligible they should take it and invest it.

Martin Lewis explanation is good. But although it is called a student loan it's a GRANT that you pay back only if and when you can. Otherwise your ability to get one wouldn't be means tested.....

ShalomJackie · 14/01/2019 17:38

Despite thinking my older DS might never earn enough to repay it off he is and his monthly payments are really high. Alrhough the loan does not impact his ability to get a mortgage on multiples the actual repayments are taken into account when they do affordability checks. Yes we appreciate he is doing well and a high earner etc but with hindsight we would have self funded. We arw helping him financially in other ways. For our youngest he will definitely not be having any student loans as his proposed career would be high earning and we will not put him through what the eldest has gone through.

We realise and appreciate that we are lucky enough to have the choice before we get slated.

Original poster
Shimy · 14/01/2019 18:00

Is it possible to get the loan for tuition fees but not for maintenance? sorry, we're new to all this.

OP posts:
Original poster
Shimy · 14/01/2019 18:08

StartedEarly - Thanks for that link. Very useful

OP posts:
Furrycushion · 14/01/2019 18:20

Yes it is,but you pay the same back whether you owe £10000 or £100000

StartedEarly · 14/01/2019 18:54

You should know that student loans taken after 2012 are quite different to those before that date.

Yes it's possible to get one but not the other but it would not reduce your DC repayments because they are based on earnings not the size of the loan.

Example from April 2019
DC1 finishes with a loan of £30000
Earns £25000
Repayments are zero.
Earns £35000
Repayments are 9% of the amount over £25725
Repayments are £965.25 a YEAR.

DC2 finishes with a loan of £50000
Earns £25000
Repayments are zero.
Earns £35000
Repayments are 9% of the amount over £25725
Repayments are £965.25 a YEAR.

DC3 finishes with a loan of £75000
Earns £25000
Repayments are zero.
Earns £35000
Repayments are 9% of the amount over £25725
Repayments are £965.25 a YEAR.

So repayments are exactly the same regardless of the loan. Of course a very small loan might be paid off but many won't and they are written off after 30 years.

If you are pretty sure your DC will be a high earner (medicine for example) and you can afford it you might be better off payig the whole lot, tuition fees as well.
However lots of very talented youngsters don't go into highly paid jobs.

Original poster
Shimy · 14/01/2019 19:31

Started - That breakdown makes is very clear.As far as "high earner", well who really knows? that's what we all wish for but best to err on the side of caution.

OP posts:
awishes · 14/01/2019 19:36

Why would anyone borrow a student loan to invest when the interest added to a student loan is in the region of 6%?

titchy · 14/01/2019 19:41

Dh has suddenly announced dc will not be getting a loan

It's not up to him you know. Your dc are perfectly able to decide and apply for their own loans without any input from you or your dh....

Why would anyone borrow a student loan to invest when the interest added to a student loan is in the region of 6%?

Because the repayments are fixed and do NOT depend on the total borrowed, and there is no requirement to repay if your salary is below £25k. So if you only ever intend to work part time, or on a self employed basis, or in a low paid career such as nursing, the repayments will be minuscule.

awishes · 14/01/2019 19:42

And do you think that is morally ok?

titchy · 14/01/2019 20:04

And do you think that is morally ok?

Eh? It's how the Government designed the system to work.

Original poster
Shimy · 14/01/2019 20:07

I think there might be a danger that in years to come govt. might review this whole student loan process and decide that loans will not be written off after 30yrs. What then will happen to all those with outstanding loans?

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titchy · 14/01/2019 20:09

Terms and conditions of loans are set at the time they are taken out and mostly set by act of parliament. If a future government decides loans are to last a life time that will apply to those who take them out at the time.

CoffeeTableBook · 14/01/2019 20:11

Take the loan and give your son the other money to use as a deposit on a house. You’d be mad to do anything different

BlaaBlaaBlaa · 14/01/2019 20:14

I came on here to basically say what CoffeeTableBook said.

Martin Lewis offers the best advice for people new to the system.

Original poster
Shimy · 14/01/2019 20:25

Thanks all. Its such a strange "loan" system that i think its difficult for many people to believe there isn't a catch to it, which is why DH is thinking he is protecting DS from financial catastrophe by not taking the loan, but obviously this is not the case.

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bsc · 14/01/2019 23:17

The problem with these loans is that the govt decides to sell off the debt, so people suddenly find their interest rate is rather less favourable than it was (though I don't think 9% of what one earns is favourable!).
What a govt ten years down the line decides to do about the university debt book can't be foreseen...

somewhereovertherain · 14/01/2019 23:22

Your DH clealy needs to read up on the system. Maybe listen to Martin Lewis.

Cracking post above explains it well.

And it’s not a loan it’s more a student tax.

titchy · 15/01/2019 08:38

What a govt ten years down the line decides to do about the university debt book can't be foreseen...

But what it can actually do to those that already have loans can be foreseen.

Original poster
Shimy · 15/01/2019 16:41

How interesting that this should come out today -
www.bbc.co.uk/news/education-46866346

Just in case anyone is interested.

OP posts:
Furrycushion · 15/01/2019 20:13

It's a very ill informed report, it should at least explain both sides.

Original poster
Shimy · 15/01/2019 20:34

The other side would be the report linked above by Martin Lewis. So we have both sides and first timers thinking of self funding can read both and come to a decision. Unless you're referring to something else?

OP posts:
StartedEarly · 15/01/2019 22:16

I have no problem with self funding if you are wealthy enough. Just that it makes no sense to half self find and half loan.

DerelictWreck · 15/01/2019 22:19

Eh? It's how the Government designed the system to work.

Not for long! It's all about to change

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