Shall I take out a Student loan for PGCE?

Maddy25

Hi

I'm graduating this year and have been part of the pre-2012 group, with the lower fees at about £3500 per year.

I've applied for PGCE this year for which I'll be getting either £15,000 or £20,000 for my bursary.

The fees are £9000 for the year, I have 2 options;

1) I can either take out a loan from Student Finance and be paying it back with interest.

Or 2) Pay the £9000 from my savings, and not take out the loan.

My dilemma is that I'm thinking of buying a house after I graduate, but I'm not too sure.
With the loan I'll have about between £25,000 and £30,000 savings but without loan I'll have between £16,000 and £21,000 savings.

Not sure whether I should, as it might be pointless to be paying interest on a loan I didn't need.

Please any advice would be appreciated.

Thank you.

Voyager2002

Imponderable...

What is the interest rate like on the loan available to you?

The worst outcome would be if you spent your own money, and then needed to borrow at a far higher interest rate to meet needs after that.

Maddy25

Hi

Thanks for your reply.

This is what I got from Student Finance website (I'm a little confused as to what it means!)

New System Income Contingent Repayment Loans 2012 (For customers in England and Wales)
From 1 September 2013 until 31 August 2014, one or more interest rates may apply to you:

Whilst studying and until the April after leaving the course
RPI, plus 3% (6.3% for 2013/14)

If you finish or leave your course before April 2016* RPI, plus 3% (6.3% for 2013/14) until the April after you leave your course,
then RPI only until April 2016

That's what's I got on the interest rate.

F1F93

I was under the impression that interest on student loans was only the rate of inflation.

Generally, the rule is to not pay off student loans early, as the rate of interest is low. Its the best loan you'll ever get - low interest rate, and if your income drops enough you stop paying. Plus, if you get to a certain age (65 i think) and you haven't paid it off then the debt is wiped.

TBH it's a no-brainer for me - I'd get it.

Poolie

F1F93 wrote: »

I was under the impression that interest on student loans was only the rate of inflation.

Generally, the rule is to not pay off student loans early, as the rate of interest is low. Its the best loan you'll ever get - low interest rate, and if your income drops enough you stop paying. Plus, if you get to a certain age (65 i think) and you haven't paid it off then the debt is wiped.

TBH it's a no-brainer for me - I'd get it.

From 2012, the government changed the rules so the interest rate varies depending on if studying or repaying. The repayment rate is then dependent on the salary so higher salary high interest repayments. Not bad for a money making scheme.

Bambi19

Hi, my best friend had exactly the same issue in 2012, she graduated at the lower student costs, then went back to the same uni to do a PGCE for £9,000. She didn't have the money to pay for it herself, so she had to get the loan. She made the most of the year (lots of work experience etc.) and walked into a good teaching job quite quickly. Now she pays a very small amount from her pay every month (which is taken automatically so she barely notices it's gone). My opinion is that the interest is so low that graduates should save their money and take the loan - I would rather get on the property ladder! I hope that helps and good luck at uni!