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Higher education

Talk to other parents whose children are preparing for university on our Higher Education forum.

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Original poster

If DD is entitled to some loans, does she have to take them?

12 replies

namechangingforapril · 08/04/2017 17:30

I'm extremely confused. DD has enough money saved for uni accommodation and we will be covering cost of living (so will get weekly money from us as she is paying accommodation), so she will not need a living loan I think it is??? But if she is entitled should she take one, or if she is genuinely ok for money, there isn't a point is there?

OP posts:

ArgyMargy · 08/04/2017 17:32

Of course you don't have to take out a loan! Why on earth would you if you don't need to?

PotteringAlong · 08/04/2017 17:33

I'd take it, bung it into the highest interest account available and pay it all back at the end.

LIZS · 08/04/2017 17:33

Ds has taken his even though it is minimum but it is a choice. Presumably she'd still need one for tuition fees.

Original poster

namechangingforapril · 08/04/2017 17:34

Yes she needs one for tuition fees.

OP posts:

senua · 08/04/2017 17:58

I'd take it, bung it into the highest interest account available and pay it all back at the end.

It used to be that interest wasn't applied until you graduated. Now you pay interest during your student years, currently at 4.6%. You'll have to look hard to find a savings account paying more than that rate.

Loopsdefruits · 08/04/2017 18:10

You don't have to, although you could always save the money you'd be giving her for after she finishes uni and doesn't have the safety net of the student loan.

BareGrylls · 08/04/2017 18:21

Is she taking the loan for fees? Some say it's pointless taking one and not the other as you pay back according to earnings rather than the amount borrowed.
So £27000 loan for fees (+interest at way more than you could get in any bank)
£20000 (say) for living expenses.
The repayment deductions are the same whether you borrow £27K or £47k. If you are an average earner you won't ever pay it back.
Good illustration here

I17neednumbers · 08/04/2017 18:29

Bare is correct I think - I didn't cotton on to this until an mner pointed this out - if you're going to borrow at all, there may be no benefit in borrowing less. Though I think it depends on whether you plan to repay early, and how much you are likely to earn - in cases where you will repay it through your (high) earnings, it may pay to borrow less. Of course you don't know which position you will be in! So all fairly Byzantine for a 17/18 yr old to navigate.

Does anyone remember at the time it was about to be introduced whether there was a suggestion that students would be required to take out the loans?! - I have a vague memory of this but may be confused.

I am fairly certain that there was a suggestion that early repayment would be prohibited in the sense that you wouldn't be allowed just to pay the whole lot back on graduation (eg with dparents money or other sources). But that suggestion was dropped fairly early on.

titchy · 08/04/2017 18:36

Has she saved enough for three years of accommodation or just the first year? If the latter she'll need a loan in years 2 and 3 anyway, and one year of rent probably isn't a large enough amount that could be better spent elsewhere.

If she has however saved three years of accommodation, so £20k or so, there's a fair argument for taking the loan and using the £20k as deposit for when she buys somewhere, assuming she wants to, as her repayments will be the same regardless.

I17neednumbers · 08/04/2017 21:13

It does highlight the idiosyncracies of the system that in in some cases it makes no difference whether you borrow more or less!

namechanging it is understandable that you're confused - it is very difficult to understand the real implications of borrowing the student loan money! I think the reality is there is no obvious right answer. The interest rates are no longer particularly low under the new system during the 3 yrs at university, so 'borrow to put it in a savings account' isn't applicable any more. I am not even sure if the rate during the time at university is lower than eg a mortgage rate (I am out of touch).

BUT it would be annoying to use savings rather than borrow the whole amount and then discover that your lifetime repayments are the same as if you had borrowed the whole lot and kept your savings for something else.

bojorojo · 08/04/2017 23:11

You can use savings for what you want. Not the loan. You cannot use that for a house deposit for example. If she becomes a SAHM she won't pay the loan back. On a low to medium salary it is hardly onerous.

cornwall1900 · 08/04/2017 23:13

If she's Welsh, then yes so I'm told.

The welsh govt currently pay half of uni tuition fees. But only if you take out a maintenance loan.

But otherwise it's up to your dd if she wants to spend her money or take a loan and save it for a deposit on a flat etc

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