Student loan of daughter or Son, does it pay to help to have less?

AdmiralX

Does it pay to reduce it, if a parent can contribute to a certain extent?
Does it pay son and or daughter to put all his/her savings towards fees to reduce/eliminate student loan?

Emmzi

AdmiralX wrote: »

Does it pay to reduce it is a parent can contribute to a certain extent?

Can you rephrase the question please, I don't understand it. What is "it"?

Lokolo

Don't use savings to pay it off. Save the money, but make sure you are getting the best rate.

I am specifically talking about pre 2012 loans though.

The current interest rate is 1.5%. You can get an ISA with 3%+

That means for every £1000, I will be £15 better off a year by putting into a savings account rather than paying off student loan. Compounding effects included means ching ching.

Jeff_Bridges_hair

You are loaning your Daughter or Son to a student/s?

AdmiralX

Emmzi wrote: »

Can you rephrase the question please, I don't understand it. What is "it"?

Sorry, for spellings

I meant: if a parent has some savings, does it pay to use part of them to help his/her S/D with the uni costs, so the student will need to borrow less?

If the student has some savings does it pay to use part of them towards the fees or maintenance and reduce the need for bigger loan?

AdmiralX

Jeff_Bridges_hair wrote: »

You are loaning your Daughter or Son to a student/s?

Right, my phrasing was not good. I mean helping (not loaning) S/D to reduce his/her debt by paying some or all of the uni costs, by using parental savings. But not asking him/her to pay back.

AdmiralX

Lokolo wrote: »

Compounding effects included means ching ching.

Many thanks, it is about post 2012 uni costs. What is ching ching btw?

redpete

AdmiralX wrote: »

What is ching ching btw?

It's the sound of money dropping into your greasy palm.

somethingcorporate

It depends how good you are with money. If you are smart you should be able to constantly out-perform the low interest on the loans and not paying them off upfront is a good thing since you can make more from saving it.

If you are lazy and/or have plenty of cash then it is obviously simpler to not have to borrow at all.

Lokolo

AdmiralX wrote: »

Many thanks, it is about post 2012 uni costs. What is ching ching btw?

Unfortunately the interest rates on Post 2012 fees (so when it's going to cost £9k a year in tuition) is less favourable.

With the student loans you may pay back more than you took out, less than you took out or none at all.

If you are extremely rich then you may as well pay the fees. However if this is money you've saved up for your DS/DD and it's the only money saved, then personally I think you shouldn't pay it off but use the money elsewhere (wedding, house deposit etc.).

AdmiralX

Lokolo wrote: »

Unfortunately the interest rates on Post 2012 fees (so when it's going to cost £9k a year in tuition) is less favourable.

With the student loans you may pay back more than you took out, less than you took out or none at all.

If you are extremely rich then you may as well pay the fees. However if this is money you've saved up for your DS/DD and it's the only money saved, then personally I think you shouldn't pay it off but use the money elsewhere (wedding, house deposit etc.).

Many thanks. Helpful because you pointed now the uncertainty on the new loans. We are not even near the rich socioeconomic category which is of no help to us - unless a miracle happens... I made a thought that might look stupid perhaps: it might be better to put the savings in a deposit and buy DS a first time small property; I am worried that money looses value but also homes values also seem to be in cycles. Some shares though have high dividends, but one has to read all the time about what sectors will be beter.