Tuition fees - loan or savings?

Indie_Kid

Is it really worth getting a loan for tuition fees or should I use my own money? I understand there's now interest added to the loan.

Lokolo

There has always been interest added to the loans, however now the interest rates aren't as nice.

Advantages of Loan
- If you die, it's not owed, its wiped
- It's wiped after a number of years, even if some is owed
- You only pay towards it above an earnings threshold (meaning repayments are pretty affordable)

Disadvantages
- The interest rate is high during study, so the amount being added to the loan is quite high, meaning it will take longer to pay back
- If you have higher earnings, you pay higher interest rate, again, adding higher amounts onto your loan

whodathunkit

I thought you used to be at university before - how much funding did you have?

Indie_Kid

A year from student finance. But only have credits.

ericctheking

There is always the problem with the loan being sold in the future to the private sector.
Take a look at the threads for erudio student loans and see the problems some ex students are having now.

Jessica.langlands

How many years do you have to wait till your remaining loan is wiped?

Lokolo

30 years

http://www.sfengland.slc.co.uk/media/561719/sfe_fshe_1314_d.pdf

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adindas

Indie_Kid wrote: »

Is it really worth getting a loan for tuition fees or should I use my own money? I understand there's now interest added to the loan.

It will depend on your circumstance, whether you have spare cash now that you will not use it and earn very little interest if you keep it, potential future income, etc . If you are expecting to earn average income than the answer is 100% take student loan. No brainer. Some people never pay it back. Student just pay 9% of anything above £21k (currently). Earn under £21,000 and you'll never repay.

For instance, If you earn £22,000 in a year, what do you repay?

The answer is £90, as twenty two thousand is one grand above the threshold and 9% of £1,000 is £90 a year. After 30 years it will be wiped out. Imagine £90 a year, not now but start paying in 3-4 year times after you graduate is almost nothing. .

Do not be scared by ERUDIO, even the government sold their debt to ERUDIO they are toothless as they will not be able to enforce the things which are not mentioned on t&C.

Also the interest rate is not that bad if compared to professional loan.
From 1 September 2013 until 31 August 2014, It is RPI, plus 3% (6.3% for 2013/14). So if the RPI this year is 2% the interest added to this year is 5%.

Look at Martin Lewis step by step guide here.

http://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes

Some people consider it as a tax rather then a real loan ....

Believe it or not that some people pretend to be a student just to get loan on maintenance which come with student loan as they anticipate that they will never pay it back due to their circumstances .....

Look at here
http://www.dailymail.co.uk/news/article-2331448/Four-10-graduates-pay-student-loans.html
Four out of 10 graduates will never be able to afford to pay back their student loans.

Even they pay many are just paying a pittance. Imagine for instance £90 a year in few years time is almost nothing