DS feels guilty for spending his student loan

[xtrainer]

So DS takes a student loan for day to day costs. We pay for his food and lodgings, but any train tickets, pints in the pub, new clothes or anything else at all has to be funded by his student loan. He does work in the holidays when he can, but long story his course is very intense so he doesn’t get a great deal of opportunity to do so.

DS has admitted he feels guilty spending his student loan. For example this summer he needs to do some field work for his course in another country. He’ll have to dip into his student loan to cover bits of it as his grant doesn’t cover it.

I think he feels that he’s wasting money by having a maintenance loan

If he feels guilty why doesn't he take out the full loan, invest it in an ISA, then use the interest? He's a bit daft though assuming he has a fee loan. Actually even dafter if he doesn't have a fee loan as he'll repay it. Is he against all forms of borrowing, would he avoid a mortgage for example?

Well he is getting a decent whack of money from you so a bit of a parent/child budget meeting would not go amiss. I am not clear about what he has spent, exactly. His full loan entitlement or less? If it’s the full amount he’s been profligate! So who is paying for the trip? The summer is long so surely he’s not studying all summer?

He needs to budget for what he needs and take out the full loan to cover it. He needs to think ahead and plan. If he did, he would have more than enough money for his trip. Presumably he’s living with you in the holidays so has less expense then. He could work for some of that time, surely?

He sounds pretty sensible, unless I’ve misunderstood? I assume he couldn’t manage without a loan, so I think he just has to see it as a means to an end, i.e. a leg up towards whatever he hopes to do on graduation. I think Martin Lewis says to look at it as a signing up for a progressive graduate tax rather than a loan.

No he hasn't spent his full loan entitlement. He's saving over half of it for a rainy day or to pay back immediately if he ends up getting a good job.

Sorry, I didn't mean that he has spent his loan for the trip. The university only fund X amount as it is compulsory, but the trip has cost £400 more. (everyone funds some of it themselves it seems)

He's usually quite crafty with money, but he feels that he's enjoying himself on borrowed money which he doesn't like. He could just about manage without a loan, but would have to work every single week of the holidays, and afford no luxuries like trips abroad/visit friends/tickets home/ occasional takeaways etc.

Ok. That’s cleared up the confusion. You and he don’t understand the loan system then. He should spend it because he might never pay it back. If he never earns really well, he won’t. So why all this angst? He should be directed towards Martin Lewis of Money Saving Expert for a better description of paying the graduate tax after graduation. It’s not a loan in the same way as a bank loan where you must pay it off. Nearly half of student loans are not paid off. In fact MSEs advice is not to pay it off early. If he and you are rich, that’s different. But if not, use the money for the reason it’s there and get over the idea that it’s a conventional loan. Why doesn’t he read up about it and understand the system a bit better so he can make sensible decisions? That would be my advice.

It's a tax, not a loan. Take it all and either use it or save it.

I wish I'd had this dilemma whilst at university!

To be fair, most people spent what they were given from whatever source whenever they were at university. Some saved up in days gone by but there was no grad tax and mortgages were given tax relief and some got 100% mortgages. Life has changed. If you are ludicrously frugal, you can save but not knowing how the system works won’t help with decision making. So that’s vital.

It's not like a loan. Think of it as a type of tax instead. The owing amount doesn't affect credit ratings or anything like that (thankfully! Mine is about £50k currently). When he's earning enough a deduction will be made from his salary just as his tax will be deducted. After 30 years, anything unpaid is wiped off, even if he's paid back nothing. If you're managing to comfortably pay for everything you are, great. If not, he needs to be using his loan and you top that up, not the other way round.

Well, he sounds very sensible.
You are paying all his main living costs and he earns some money in the holidays for his "spends".
He needs to find a savings account with some interest and save the money he doesn't need to spend for when he suddenly needs a car for his first job, or towards his deposit for his first flat, etc.

He could always donate back what he saves up from it to pay off part of the national debt.