"Take it and invest" or "forget about it"

wirm

I'm on my first year of Uni and I am getting £3000 of a loan and £2000 of a grant. I was offered £4000 of a loan but I decided to only take what I would need. I'm currently working part time and saving some of my pay (I've saved nearly £1000 so far). I hope to have saved over £2000 by September next year.

My plan was to save and then take less of a loan next year and do the same each year after, as I would prefer not to have a massive debt.

However I'm now starting to wonder should I take the full loan next year and then invest it, or do something with it to earn a bit of money off it....

Does anyone have any suggestions about what I should do...

pavlovs_dog

ah the age old debate!

i think the first thing to bare in mind is unforeseen circumstances. you might be the best MSE'r there is, but you just have no idea whats around the corner. its all well and good to take less loan and live on the knife edge, but what will you do (god forbid) if your car dies :eek:, the roof caves in :eek:, you need £2000 to fly to australia to rescue your great aunt mildred from kidnappers :eek: :eek: ? the worst expenses at uni are always the ones you havent planned for, because if you dont have an emergency fund gathering dust to be used on a rainy day, when the poo hits the fan, your budget goes out the window, which affects the overdraft, the overdraft affects something else etc etc. remeber the scouts moto: be prepared. if you have family who you can turn to in financial dire straits, thats slightly different, buts its a luxury few of us have available to us.


what will you do if your workload starts affecting your coursework and you have to quit your job?

are you planning on post graduate study? how will you fund it (because grants, loans, scholarships are few and far between). is PG study something that is essential to your future career, or something that you would LIKE to do (and can, if necessary, be put on hold until you can afford it?)

what if you graduate and cant get a job, and you no longer fancy cheap and cheerful student accommodation? how much will your costs of living be? could you cope on the dole?

what are your opinions on graduating with debt? and on the whole student loans are the most favourable lending rates you will ever be offered debate? (see martins articles or previous threads). how would the return on your investment compare with the interest rate incurred on the loan?


how will you finance the "necessary" :cool: student social expenses? Holidays, driving lessons, field trips?


how will your actions affect your credit rating? will not taking credit do more damage than good?



all questions that only you can fully answer. from where im sitting, you've been a member here for a fair while, you seem sensible enough as far as money is concerned. so it comes down to whether you would rather avoid taking the loan as much as possible (in which case i would still take at least the minimum amount next year, and stockpile this. live off your wages for the 2nd year of the degree, then in the 3rd (and possibly final year, depending on what/where you are studying), live off your large nest egg, enabling you to concentrate on the degree more than the part time job, and avoid racking up more debt in the process.

alternatively, take as much loan as you can get your hands on, accept that you WILL graduate with debt, but a "positive debt" (if such a thing exists ) and use your nest egg as a deposit for a house, to tide you over until you get that graduate job, to pay for PG study, to fund training...whatever you need it for. but dont take the loan with the intention of investing it if you'll only end up frittering it away.

im not entirely sure how the system differs in your neck of the woods (if it does at all), so before you make any decision makes sure you get clued up on how the system works, what your options are for the future and so on.

remember, you can always go for the non assessed part of the loan, and ask for the grant maintained bit if you find you cant afford anything more than tesco own brand noodles which taste like cardboard for tea

wirm

Thanks pavlovs_dog for a really thought out reply!

wirm

megsykins

Not much to add to pavlovs_dog, all the issues are covered!

Just to say that I'm saving mine, as are quite a few people that I know.
Personally, I'm saving so I can take a year out after graduation and travel; some of my friends are saving for house deposits (one true MS student i know even bought a house in a cheap area using their first year loan as deposit, rented out the spare rooms to cover mortgage and so aren't paying any rent and are making ££ on house prices!!) One is saving for their wedding, others are saving for Masters / similar, pthers just like the idea of having that lump sum and the freedom to do what they want when they graduate, no pressure to start earning straight away.

Look at what you want to do after graduation. Will you need ££? By investing you can make an extra few hundred ££ which is always a bonus!

One other thing, depending on how much you enjoy your job, maybe you could live off loan and pack in the job? A recent survery said that the proportion of student who work PT and get 1sts / 2:1s is much lower than those who don't work. Is it worth concentrating on your degree? Can you get a PT job that is relevant to your degree and so provides work experience?
(I can't talk though, i work PT in a pub!)