Student Loan - Yah or Nay ?
Discussion
I'm sure this has been done before, so apologies I couldn't find it in the search results.
My eldest heads off to Uni in September (assuming she gets her grades).
Fees will be £9,250, accommodation £8,600 (central London, 40 weeks), other living costs circa £100 a week.
She will be able to cover the latter herself (she already has a part-time job with a major retailer, so getting a few shifts a week in London should not be a problem)
What about the rest, what is the common wisdom, do I stump up (£18k) through earnings and savings or let her take out student loans (and she pay the shortfall, about £3k) ?
I haven't studied the details (yet) but I understand the interest on the loans is 6.3% (which sounds expensive ) and at first drives me to pay. However the other the side of the argument is she is an adult, and any money we save could support her in buying a house later on, although the reality it will all be wasted on cars on holidays by the wife and I.
My eldest heads off to Uni in September (assuming she gets her grades).
Fees will be £9,250, accommodation £8,600 (central London, 40 weeks), other living costs circa £100 a week.
She will be able to cover the latter herself (she already has a part-time job with a major retailer, so getting a few shifts a week in London should not be a problem)
What about the rest, what is the common wisdom, do I stump up (£18k) through earnings and savings or let her take out student loans (and she pay the shortfall, about £3k) ?
I haven't studied the details (yet) but I understand the interest on the loans is 6.3% (which sounds expensive ) and at first drives me to pay. However the other the side of the argument is she is an adult, and any money we save could support her in buying a house later on, although the reality it will all be wasted on cars on holidays by the wife and I.
Daughters are expensive.
:
My daughter has student debt luckily taken out on the pre 2012 lower £3375 fees system and this debt is repayable at the lower rate of either B of E base rate plus 1% or CPI latest Sept to March. So interest rate is therefore 1.75% hence it is a no brainer NOT to pay the debt off As it is easy to earn way in excess of this interest rate.
The post 2012 loans were as you say at the higher rate and basically if you can earn in excess of the 6% with the money allocated to clear the debt then don't pay it off but the argument for clearing these debts is far more convincing especially if your daughter will be a high earner.
:My daughter has student debt luckily taken out on the pre 2012 lower £3375 fees system and this debt is repayable at the lower rate of either B of E base rate plus 1% or CPI latest Sept to March. So interest rate is therefore 1.75% hence it is a no brainer NOT to pay the debt off As it is easy to earn way in excess of this interest rate.
The post 2012 loans were as you say at the higher rate and basically if you can earn in excess of the 6% with the money allocated to clear the debt then don't pay it off but the argument for clearing these debts is far more convincing especially if your daughter will be a high earner.
my eldest started uni last year, she has signed up for student finance, which covers uni fees, we also signed up for the maintenance portion, although she doesn't get the full amount, due to my income. covers about 2/3 of halls of residence cost (norwich). I top up with about 500 a month. Unfortunately, she is doing medicine so doesn't have any scope to do part time work, as its pretty full on.
I guess it depends on where your daughter ends up going careerwise.
We looked at it from the point of view that she will have a big debt by the time she is finished, but as its taken off the payslip, the payments will just be another deduction until they stop - assuming that she earns enough to pay it off. The amount paid back per month is the same whether you have taken it all or just the tuition fee, you just pay longer if you have borrowed more. Some kids will never pay it all off before the end date, so remaining debt just evaporates - girls who's career hasn't really go going before they take time out for kids, for example.
I guess it depends on where your daughter ends up going careerwise.
We looked at it from the point of view that she will have a big debt by the time she is finished, but as its taken off the payslip, the payments will just be another deduction until they stop - assuming that she earns enough to pay it off. The amount paid back per month is the same whether you have taken it all or just the tuition fee, you just pay longer if you have borrowed more. Some kids will never pay it all off before the end date, so remaining debt just evaporates - girls who's career hasn't really go going before they take time out for kids, for example.
This might help: https://www.moneysavingexpert.com/students/student...
The interest rate is really not the main factor. The majority of people never have to pay it off, so for them it’s very cheap money. For those that do end up earning well enough to have to pay it all, you can just pay it all off at that point using money borrowed more cheaply (there’s no penalty). So personally I’d take the student loan.
University is very expensive. When I was at uni, I think I was only paying around a grand for tuition fees. If you've got the cash upfront I'd put it aside. That large lump sum would probably be much more useful once she finishes uni and wants to get on the housing ladder.
I think most simply accept that going to university = paying back student loan for a long period of time. Debt wise, it's the best/safest out there. If you don't earn over £25k you don't pay back. It doesn't affect your credit rating.
Interestingly:
I've just finished paying back my student loan. Was around 30k total and took 10 years to do so.
I think most simply accept that going to university = paying back student loan for a long period of time. Debt wise, it's the best/safest out there. If you don't earn over £25k you don't pay back. It doesn't affect your credit rating.
Interestingly:
Which said:
A major 2014 study by the Institute of Fiscal Studies into university funding (entitled 'Payback Time?') estimated that around 73% of graduates won’t have paid back their full loan back after 30 years.
And consequently the debt is written off.I've just finished paying back my student loan. Was around 30k total and took 10 years to do so.
Edited by g3org3y on Saturday 30th March 19:40
I think it’s also partly influenced by what sort of career they’re aiming to do when they graduate.
A kid off to LSE hoping to make it in investment banking when he/she grads, could probably pay off the job lot with the 2nd or 3rd year bonus.
If the plan is to become a town planner or do some civic engineering, then it’s probably a deeper consideration. Different industries, different remuneration levels.
My personal view is that whilst higher, quality education should have remained free to all and partly financed by LA grants if from lower income backgrounds, that times have changed irrevocably. And whatever the cost, the overall net impact it provides to an individuals salary or earning power over their lifetime is worth it.
The littl’uns can get their own loan, understand the importance of money and learn to persevere with making their way into the world. A student loan isn’t that big a burden in the whole scheme of things considering what someone could gain from their early twenties onwards.
A kid off to LSE hoping to make it in investment banking when he/she grads, could probably pay off the job lot with the 2nd or 3rd year bonus.
If the plan is to become a town planner or do some civic engineering, then it’s probably a deeper consideration. Different industries, different remuneration levels.
My personal view is that whilst higher, quality education should have remained free to all and partly financed by LA grants if from lower income backgrounds, that times have changed irrevocably. And whatever the cost, the overall net impact it provides to an individuals salary or earning power over their lifetime is worth it.
The littl’uns can get their own loan, understand the importance of money and learn to persevere with making their way into the world. A student loan isn’t that big a burden in the whole scheme of things considering what someone could gain from their early twenties onwards.
Depends. Will she be doing a worth while degree? Or will it just be another pointless one where she’s really just paying £9000 a year to go out get drunk and get dicked down by several guys a week?
Will the job she gets actually pay it back at the end with higher wages than she would get normally?
Will the job she gets actually pay it back at the end with higher wages than she would get normally?
Wilmslowboy said:
Feels the right answer is to take the loans and we can take a view later, if to settle or to let her pay them off over time.
This is what I would do. There is little advantage in making an early decision to pay the fees. If she ends up choosing a career path which involves a lower salary, you would have paid unnecessarily.
And university funding is a political hot potato, so there is a reasonable possibility the current interest fees could be reduced to make them a little less punitive.
And if nothing changes, you could always decide to pay it off at a later stage if she starts to earn a higher salary, and so help her avoid the compound effect of a high interest rate.
Nickbrapp said:
Depends. Will she be doing a worth while degree? Or will it just be another pointless one where she’s really just paying £9000 a year to go out get drunk and get dicked down by several guys a week?
Will the job she gets actually pay it back at the end with higher wages than she would get normally?
Helpful.... Will the job she gets actually pay it back at the end with higher wages than she would get normally?
As she's doing physics its a good guess she wont be wanting to leave uni and work in Sainsbury's forever more. Its also a good guess that most 'physics jobs' probably aren't accessible without a relevant degree. And if you think that students in London can afford to go out several times a week and get drunk on even student priced drinks the world has changed a bit.
Anyway... OP... get divorced. You'd be amazed how much support there is for 'low income families'. Keep the £18k and spend it on cars and holidays.
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