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Higher education

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

Original poster

Can you just get tuition fee loan?

37 replies

Puppupandaway · 16/10/2024 16:35

Hi all. So DS has settled into uni life but we're finding he's hardly using his maintenance loan money (commutes in from family home and is very thrifty). He is due about £6000 over the year and I can see him easily having at least a few thousand left by the summer.

So I'm thinking, would it be possible to just have the tuition fee loan for year 2 and we decline the extra maintenance loan? It will then mean he will be paying off his loan earlier as it will be much less. But I don't know if this is possible. I know we have to apply every year for the student finance, so I'm thinking we might be able to but I can't find this info anywhere.

Anyone had experience of this?

OP posts:
titchy · 16/10/2024 16:39

Yes you can do that. Bear in mind his repayments will be exactly the same though, they won't reduce. He could take the loan and invest it...

boys3 · 16/10/2024 16:53

Yes. just don’t apply for a maintenance loan. There’s no element of compulsion in the system.

TreesWelliesKnees · 16/10/2024 16:58

He may pay his loan off more quickly but his monthly payments will be the same, as this will be based on his income. Depending on how much he earns, the interest rate, and his total debt after graduating it may make no difference to him for several decades.

Original poster
Puppupandaway · 16/10/2024 17:05

Thank you all. Yes I know it won't change how much they take each month, but I'm thinking every little helps and if his loan ends up being maybe £10,000 less then he may have a chance of paying it off before he retires at 65!!

I hate the fact that he's going to be saddled with 9% graduate tax for many many years so I'm trying to think how we can help. If he doesn't need the money, surely it makes better financial sense to not borrow it in the first place.

Thank you.

OP posts:
RoastLambs · 16/10/2024 17:22

'We' don't apply for it every year, your son applies for it every year. Not you. I don't want to sound like a cow but you really should use these university years to ensure he is managing his own life, despite living at home.

I'm surprised that he wouldn't realise he can apply for the maintenance loan or not apply for it. If he doesn't apply for it he won't get it. A lot of students who stay at home don't take the maintenance loan.

user8754387 · 16/10/2024 17:50

Pay it off straight away. It is currently accruing interest (interest accrue from day 1). It's pointless having it.

The comments about him paying back the same above are misleading. Yes the payments might be the same but the more he borrows the longer he will be paying it off.

Original poster
Puppupandaway · 16/10/2024 18:03

@RoastLambs The reason I say 'we' is because parents are involved in the process, we have to give financial info.

OP posts:
Bunnyannesummers · 16/10/2024 21:50

If you really don’t need it the best financial decision is probably to take it, lock it away in a high interest savings account and leave it be a while.
you start accruing interest from day 1, so even reducing the amount probably doesn’t mean you’ll repay it quickly. The reality is that most students, regardless of total owed, will pay the ‘graduate tax’ for their entire careers because of the interest even if they just take out 36kish as you propose.
There’s a lot of moving factors to this, including your DCs career path, whether they’re ever likely to take time out of their career and many variables you just can’t know. But generally it’s a good loan on terms, so worth seeing if it can be valuable to you - even if not for the intended purpose

mondaytosunday · 16/10/2024 23:53

People don't seem to understand the more you borrow the more interest is accruing. I see no reason to borrow if not needed. 'Put it in a high interest account' - is there one that is above the interest charged? Interest is 4.3% now but has been as high as 8% this year.
While student loan debt will not affect credit rating it will affect affordability when applying for a mortgage.

user8754387 · 17/10/2024 05:49

Taking it and putting it in a savings account is stupid. Its compound interest at a high rate. Plus there is tax to pay on savings interest (although you could put it in an isa) Yes there is a slim chance you won’t have to pay it back but do you know where the better chance lies that you won’t have to pay it back? Not taking it in the first place.

In no other area would we advise people to take tax payers money that they don’t need

MargaretBetts · 17/10/2024 06:08

’We’ didn’t bother with the maintenance loan. It is very much a ‘we’ as I am expected to declare all my earnings and make up the difference from the minimum amount!

Same situation OP, commuting from home, I just pay for life in the same way I always did and keep DC’s car on the road/pay train fares. They have a p/t job and earn more than enough to fund their social life.

Absolutely a compound interest issue for me. A £20k debt or whatever DC’s total maintenance grant would be after four years would increase by more than £4k in total at 8% before they’ve even graduated. Getting on the housing market is difficult enough for most kids these days without reducing their affordability if there’s remotely a choice not to.

Bunnyannesummers · 17/10/2024 16:18

If you’re already taking tuition fee loans, with interest, the likelihood is you’ll be paying it off for the rest of your working life. (Unless you are going into a particularly high earning job from day 1)
If that’s the case (that you’re paying it off for the rest of your working life regardless) you may as well take the full amount you’re entitled to and use it to benefit you as much as possible (whether that’s at uni or later). Because your repayments don’t change depending on the total amount you borrow.
Obviously, you need to factor in your likely earnings to see what’s best for YOUR circumstances.
No, it’s not how the system is designed to be used, but it’s a badly designed system so you may as well get what you can from it.

Precipice · 17/10/2024 16:29

user8754387 · 17/10/2024 05:49

Taking it and putting it in a savings account is stupid. Its compound interest at a high rate. Plus there is tax to pay on savings interest (although you could put it in an isa) Yes there is a slim chance you won’t have to pay it back but do you know where the better chance lies that you won’t have to pay it back? Not taking it in the first place.

In no other area would we advise people to take tax payers money that they don’t need

There's no way he'd be exceeding the threshold over which you have to pay tax on the interest.

Sweetpeasaremadeforbees · 17/10/2024 18:43

When DD hopefully goes to Uni next year she'll only take the tuition loan. We've budgeted for £1000 a month term time to cover accommodation and food, she's already said she'll be going for the cheapest accommodation option! She'll have to find a holiday job for spending money during the holidays. We'll decide whether to pay back the tuition loan when she finishes and we see what kind of job or career she goes onto, but that's four and a half years away!

MargaretBetts · 17/10/2024 21:49

Bunnyannesummers · 17/10/2024 16:18

If you’re already taking tuition fee loans, with interest, the likelihood is you’ll be paying it off for the rest of your working life. (Unless you are going into a particularly high earning job from day 1)
If that’s the case (that you’re paying it off for the rest of your working life regardless) you may as well take the full amount you’re entitled to and use it to benefit you as much as possible (whether that’s at uni or later). Because your repayments don’t change depending on the total amount you borrow.
Obviously, you need to factor in your likely earnings to see what’s best for YOUR circumstances.
No, it’s not how the system is designed to be used, but it’s a badly designed system so you may as well get what you can from it.

I disagree, paying off a lesser debt is more likely to be achievable as a lump sum, a bonus (or even my bonus) or when I downsize to be able to give DCs a small house deposit, which is part of my plans as things stand.

Taking the loans just because they’re available isn’t financially responsible imo.

Spirallingdownwards · 17/10/2024 21:55

Bunnyannesummers · 17/10/2024 16:18

If you’re already taking tuition fee loans, with interest, the likelihood is you’ll be paying it off for the rest of your working life. (Unless you are going into a particularly high earning job from day 1)
If that’s the case (that you’re paying it off for the rest of your working life regardless) you may as well take the full amount you’re entitled to and use it to benefit you as much as possible (whether that’s at uni or later). Because your repayments don’t change depending on the total amount you borrow.
Obviously, you need to factor in your likely earnings to see what’s best for YOUR circumstances.
No, it’s not how the system is designed to be used, but it’s a badly designed system so you may as well get what you can from it.

Simply not the case now. More than 50% under the new plan will pay it. Mid earners are worse hit. High earners will pay back quickly. Low earners may never pay it back but those mid earners will pay and pay and pay for the full 40 to mainly cover interest.

Seriously don't take what you don't absolutely need.

user8754387 · 17/10/2024 22:29

Precipice · 17/10/2024 16:29

There's no way he'd be exceeding the threshold over which you have to pay tax on the interest.

Show quote history

Not initially obviously. But the student loan lasts for 40 years. Taking it when you don’t need it is foolish and will give a false sense of wealth

SlenderRations · 18/10/2024 08:19

You can also take less than the maximum offered, if wanted.

MargaretBetts · 18/10/2024 08:37

We’ve done just that @SlenderRations , half of the tuition loan. I’d have been expected to top up the maintenance loan to that sort of figure based on my earnings but DC’s choice to commute meant it wasn’t required so I made the decision to do that.

Not sure what DC2 will do and if I’ll be able to do the same if they choose to move away as well as top up maintenance.

Original poster
Puppupandaway · 05/11/2024 12:56

Now the tuition fees are going up, it's got me thinking about this again.

I've just worked out that even if my son starts to earn £50,000 when he graduates (which is unlikely), his 9% repayments will still be under £200 a month. There is no way he will clear his debt of four years, plus interest, before the forty years is there??? So I'm now wondering, hell why not just get everything they're offering and use those 'unused' thousands in maintenance loans for when he graduates and needs a deposit for a flat or a car or a season pass on the train etc...

What do you think??

OP posts:
Original poster
Puppupandaway · 05/11/2024 12:57

@Bunnyannesummers I think I'm thinking the same as you now!!

OP posts:
user8754387 · 05/11/2024 13:39

Puppupandaway · 05/11/2024 12:56

Now the tuition fees are going up, it's got me thinking about this again.

I've just worked out that even if my son starts to earn £50,000 when he graduates (which is unlikely), his 9% repayments will still be under £200 a month. There is no way he will clear his debt of four years, plus interest, before the forty years is there??? So I'm now wondering, hell why not just get everything they're offering and use those 'unused' thousands in maintenance loans for when he graduates and needs a deposit for a flat or a car or a season pass on the train etc...

What do you think??

he wouldn't pay off his loan plus interest but at a salary of 50000 (with no pay rises) he would pay back £90,014 - way more than he would have borrowed.

Original poster
Puppupandaway · 05/11/2024 15:18

@user8754387 Looking at the maths of it all, the 9% taken from the salary doesn't even clear the monthly interest payments for his first year, let alone his four year degree!!

OP posts:
Original poster
Puppupandaway · 05/11/2024 15:18

I mean the monthly graduate tax won't cover the monthly interest gained.

OP posts:
SaveMeFromMyBoobs · 05/11/2024 15:24

Take it and invest it. There's no way what he'll pay will even cover the interest on what he borrows even tuition fee only. May as well have the extra few thousand getting interest for a house deposit or whatever.