Student Loan or Pay

Companion_Ball

Hi there

Going back to uni in september for my second year and will have earnt enough during the summer that i could possibly pay my tutition fee, instead of taking a student loan out.

Just wondering whats better off in the long run, recommendation, thoughts?

Thanks alot!

Masomnia

Keep the loan.

Save the money in an ISA and earn upwards of 6% on it. The loan works out at 3.8% this year, so it makes financial sense to save it and pay it off later. You're better off with it in an account than by paying your loan off. If you save the money in an ISA now you're building up a nice nest egg of tax free savings which makes little difference now - since I'm guessing you don't pay tax - but in the future when you do, it'll be handy to have a good few thousand earning tax free interest.

Also, if you have it saved you have it 'just in case' if you need money suddenly it's there, and you won't have to borrow more.

Hope this helps!