Student Loan, should i take it?

chris_topher97

I have a student Loan available to me for £3,851 when i go back to uni in september, but i wont be needing it.

I already owe £12,500+ so originally decided not to take up the extra money.

But i'm worried i'll regret the decision further down the line, i'm thinking i have this great loan available to me now, which should probably be snapped up and stored away for a rainy day.

Putting it in an ISA is not an option as i will have no allowance left for it, so what other ways can i store this money away and be guaranteed of earning interest above what i'm paying on the loan??

iNFLUENCE_2

chris_langs wrote: »

I have a student Loan available to me for £3,851 when i go back to uni in september, but i wont be needing it.

I already owe £12,500+ so originally decided not to take up the extra money.

But i'm worried i'll regret the decision further down the line, i'm thinking i have this great loan available to me now, which should probably be snapped up and stored away for a rainy day.

Putting it in an ISA is not an option as i will have no allowance left for it, so what other ways can i store this money away and be guaranteed of earning interest above what i'm paying on the loan??

Put it in a high interest account? Remember if your a student and you eanr under the threshold for income tax (about £6000 this year) the interest you could earn would be tax free so long as you fill in the correct form

Masomnia

If you're sure you won't need it, then there are a few 7% fixed rate 1 year bonds knocking about.

chris_topher97

Masomnia wrote: »

If you're sure you won't need it, then there are a few 7% fixed rate 1 year bonds knocking about.

I've never really looked into bonds or anything, because i dont really understand them.

So let me get this perfectly straight, i'm allowed to put say £3,500 into a 1 year fixed bond, after already reaching my ISA limit of £3,600 for the tax year. And be guaranteed a 7% return before or after tax? once the term is up.

CLAPTON

if your income (earnings plus gross interest excluding loans and ISA interest ) is less than £5435 this tax year then you can register your saving a/cs so you get paid interest gross (fill in form R85 when yopu open the a/c)... so you can easily better the 3.8% you will be charged by the SLC for sept2008 - august 2009.

A fixed bond is merely a savings a/c such that you can't withdraw the money until the end of the bond period (well sometimes you can withdraw but you lose interest).

chris_topher97

iNFLUENCE wrote: »

Put it in a high interest account? Remember if your a student and you eanr under the threshold for income tax (about £6000 this year) the interest you could earn would be tax free so long as you fill in the correct form

I dont think i'll get the tax back because i work a fair bit aswell, and am quite likely to go over the £6k threshold.

Although i have just seen the A+L Premier Account, offering 8.5%
http://www.alliance-leicester.co.uk/current-accounts/premier-50-account.aspx Even after tax has been deducted thats 6.8% so i can put my first £2,500 in there, and then the rest in the Egg savings account 6.3% (5.04% after tax) And so all my money will be earning more than the 3.2% interest i'll be paying on my student loan this year.

CLAPTON

your paying 4.8% interest this year
and wil pay 3.8% from sept2008 to end aug 2009

chris_topher97

i knew it was 4.8% this year, changing in september. although my 3.2 is wrong, i've just checked the RPI for march 2008, 3.8% like you said, and realised the first time i searched on google i was looking at the RPI for jersey, oops

chris_topher97

oops, i cant open the A+L Premier account because i'm not over 50, slight issue

hustle90

chris_langs wrote: »

oops, i cant open the A+L Premier account because i'm not over 50, slight issue

You don't need to be over 50... I have one and i'm 17.

melancholly

you do also have to fund the A&L with a minimum amount each month as well.