Can I save money whilst at university ? (Student loan related)

kteara

hello, I will be going to university in september 2013 (this year) I am unsure about a few things though, My aim throughout university is to save money to add to my already exisiting £4500 (life savings) I have in my cash ISA.

The thing that annoys me is that the student loan I receive is going to ruin everything. its extra money that isn't mine that I have to payback. it doesn't keep things simple (how I wish it would be). So how am I able to save and increase the £4500 to lets say £7500 once I finish university and how do I deal with the student loan ? should I be saving up money to pay back the student loan and use the £4500 cash isa or what? I am really confused because my aim is to save throughout uni to have enough for a deposit on a house, but it seems like I am going to have to make and save money throughout uni just to pay back the loans

thanks in advance

Dunroamin

How much do you think you'll be earning while you're at university?

I really wouldn't be planning on paying any more off than your student loan than you have to.

cannyscot_2

My DD started Uni this year and amazingly despite having money in her bank account has spent very very little. She does not drink , buy coffees, or any irrelevant stuff. It is just her nature. On this basis she would have saved money from her terms living money but will still have the loan for fees at the end of the degree.

Ian5

You do not have to have a student loan, one option is therefore not to. Alternatively the student loan is a pretty cheap way of borrowing until post grad, you earn over the threshold limit and they then start hitting you with interest, so another option is to aim to pay off the entire student loan in one hit as soon as your earnings go over that threshold limit. A third option is to work out if you can buy that house asap near your uni and rent out rooms to other students, this could help with the buy a house goal and might be a financially clever in these times of low interest and high rents.

kteara

I think there's been a slight confusion. My aim is to save up money whulst at uni for a mortgage deposit on a house I hope to own by age 30. I want to know if this is impossible and if I should be essentially saving up to pay off my student loans meaning I will come out of uni with debt and zero money available to pay towards a mortgage deposit

phona

The simple answer is if you spend less than your income then yes, you can save.

I don't quite understand why you say your loan will "ruin everything". It is an important part of your income while you're a student. Once your rent, bills, etc are paid, whatever is left from your student loan can be popped into your ISA with anything from work, your parents...
Perhaps you are thinking of the student loan as being like other debt. It is not hanging over you, waiting for you to graduate. Nobody is going to suddenly demand it back or slap extortionate interest on it. You'll pay it back gradually if and when you earn enough as a graduate. It's more like a tax than a loan repayment since it's taken straight off your salary.

My advice would be to take the loan and save as much as you can at the best rate you can. When you graduate, take a look at the interest rate you are getting on your savings and the rate interest is being applied to your loan and work out if you're better off paying the loan at this point.
Your time as a student is not the best time to save but you should be able to save something if your money management is good. Your plan to have a mortgage by 30 depends rather more on the job (and salary) you get after university.

Fire_Fox

This is all covered in Martin's advice guides for students
http://www.moneysavingexpert.com/family/

Derivative

I am under the old system so my interest rates are lower than yours - keep this in mind. You may wish to repay earlier as the rates approach commercial ones.

I take out full loans and still manage to save.

If the student loan will be your only debt, then you can use two figures to look at how your savings plan is going:

'Gross' savings: that is, the total amount in all of your savings accounts
Net savings: Gross savings minus the student loan.

You should certainly be able to increase gross savings if you're receiving adequate funding.

Net savings will be difficult. To increase those you'll have to completely cover living costs without 'using' any of your loan.

It is possible with a lot of part time work or summer internship programmes, but it may be worth considering whether that will have an adverse effect on your studies. Keep in mind also that year 3 > year 2 > year 1 in terms of difficulty, generally - so as time goes on you may find you have to give up part time work entirely.

If you need to go into your loan to support yourself then your net worth will be decreasing, but it's worth recognising that:

a) your student loan won't be accounted for on a mortgage application
b) the loan is only repayable as a marginal tax if you earn above a certain amount - so it's never going to bankrupt you.