Is it worth it?

tryingtodobetter

Is it worth me getting the student loan just to put it in an ISA, will i make more interest than i get charged?

Blacksheep1979

short answer - yes

Bamber19

Based on what the interest being charged is going to be for next year (up to 4.8% from 2.4%) i'd maybe reconsider.

Nealmason1986

talking of student loans

can they put the interest rate up on the loan i currently have. i have had 3 years loan and had abour 12,000. will i get charged 4.8 on that or is it only on future loans. i think its a bit tight putting it up when u agreed to initially take the loan on with a 2.4 interest rate

Broke_Student

Nealmason1986 wrote: »

talking of student loans

can they put the interest rate up on the loan i currently have. i have had 3 years loan and had abour 12,000. will i get charged 4.8 on that or is it only on future loans. i think its a bit tight putting it up when u agreed to initially take the loan on with a 2.4 interest rate

Yes, they can and will put up the interest rate. The interest rate is linked to inflation. If you read the contract you agreed to initially I am sure that it will have clause allowing them to change the rate of interest rate so unfortunately you would not have much of an arguement against this.

Broke_Student

Nealmason1986 wrote: »

talking of student loans

can they put the interest rate up on the loan i currently have. i have had 3 years loan and had abour 12,000. will i get charged 4.8 on that or is it only on future loans. i think its a bit tight putting it up when u agreed to initially take the loan on with a 2.4 interest rate

The new rate will apply to both existing loans and future loans.

Sausage_Roll

Wheres the 4.8% figure coming from? I thought it was the rate of inflation which isn't at 4.8%.. is it?

scubaleopard

ISA's are I believe Instant Savings Accounts so this would only be a good idea if you could be sure you will leave it alone and not go near when a night out when you are skint isn't tempting

BillScarab

An ISA is an Individual Savings Account and can be used to invest in shares or cash tax free. You can invest up to £7000 in each tax year. The cash ISA's are basically like tax free building society accounts. There is a useful guide to them on this very website under the savings and investments section.

According to that the best at the moment are Barclays which pays 6.5% (but only for one year) or Egg who pay 6.05%.

On those figures it would definately make sense to take out a loan at 4.8% to earn 6.05% or 6.5%. It won't make you rich but it will help.

Remember when you leave college and need to buy a house or car or furnish rented accommodation etc. you won't get a loan at such favourable terms as 4.8%. It will be much better to have the money in an ISA earning a small amount ready to spend.

cupid_s

I took out the loan and put it away to save. I used it to put towards a deposit for a house and I'd never have been able to buy my home without it.

As you're a student and I imagine you don't pay tax on the interest you receive you might be able to find an account which ties up your money for a year or two (depending on when you are due to finish uni) and gives a very good rate without the ability to access it in case you're tempted to spend it.

Nealmason1986

i thought an ISA was only 3000 a year. im confused now