Should I Get a Student Loan?

ThaBigBoss

Basically I have aquired a vast sum of money and I was wondering whether or not I should get a student loan?

I shall be starting my second year of university in three weeks time and I have yet to apply for a loan.

I had a loan last year but TBH I didn't really need the money as such.

However I am unsure about whether it would still be worthwhile getting a loan as it is of very low interest?

I don't qualify for any grants etc. but like all students I am eligable for the standard maintenance loan as well as a loan to cover my tutition fees.

I have already maxed out my ISA allowance so therefore any money I do receive will not be earning an awful lot in my savings account.

Basically I am unsure about whether or not it would be benefitial for me to apply for a student loan despite the fact I already have more than enough money to live on thoughout university. I am slightly confused about the best thing to do and if anyone could offer me any advice it would be much appreciated.

Taiko

Take it, you'd make more interest in savings then you would be paying on it, plus it's written off.

Cardozo

Take it. You'll be paying 1.5% interest on the money but earning atleast 3% in a savings account. It may mean you have a considerable amount of money at a low interest rate when it comes to getting a house and therefore a smaller mortgage.

ThaBigBoss

I already have enough money to buy a house mortage free so that's not an important factor for me.

I have done some basic calculations based on receiving around a £4k maintenance loan.

£4000 x 1.015 = £4060 to be repaid

£4000 x 1.013 = £4120 earned with interest (approx)

So basically all I would be earning is £60 over the course of the year?

Is that really worth it for all the effort of applying for a loan/repaying it etc?

atypical

ThaBigBoss wrote: »

Is that really worth it for all the effort of applying for a loan/repaying it etc?

That's up to you.

If you're very sure that you won't require lending in the future then it perhaps isn't worth it. But be aware that you're giving up the cheapest money on the most favourable terms you'll ever probably be given.

ThaBigBoss

That is true.

However am I correct in beleiving that the interest rate of student loans can increase and obviously interest rate on investments can fall resulting in myself losing money?

Also does anyone know the process of repaying a student loan?

Do you just simply phone them up an inform them that you want to make a repayment or is there a certain time period it has to be paid?

atypical

ThaBigBoss wrote: »

However am I correct in beleiving that the interest rate of student loans can increase and obviously interest rate on investments can fall resulting in myself losing money?

The thread here discusses this:
https://forums.moneysavingexpert.com/discussion/3441319

ThaBigBoss wrote: »

Also does anyone know the process of repaying a student loan?

Repayments are automatically taken through PAYE when you earn over £15,000 (this threshold increases with inflation).

If you're self-employed, you take responsibility for ensuring repayments are made as required.