Does it make financial sense to accept Student Loan and Grant even if not necessary?

Mother_soontobe_Teacher

Hello,
I would like some advice on a situation I am being faced with.
I am about to start a PGCE in September as a mature student. I am in a lucky position where I get my fee’s paid for and I am not in a position where a student loan will be vital (though of course, it would be handy but my husband will still be working).
I am trying to decide if it makes financial sense for me to take the loan and grant?
I applied for student finance as I had to apply for DSA and it seemed I could only do this if I applied for the student finance and I have just got my award letter which says I will get: £7,837 a year. (£4,450.00 loan and £3387.00 grant).
Like I have stated, I could survive without this, however, if it made financial sense for me to take this, of course I would.
I have tried reading the student loan guides on here but maths has never been my strong point and I am a little confused!
If I take the loan and grant, and stick it in a savings account, would I technically be losing money due to the interest that is added to the loan etc in the long term?

• It might be worth adding that I have just graduated from University (again as a mature student and taking the loan and grant – but these are from the ‘old’ system as I started university in 2011.
  
• One more thing (sorry!) is it possible to take the grant and not the loan?
  

Many thanks for any replies and I hope I have made sense, if I need to be clearer on anything, please just let me know – I am just really looking for the way which makes most financial sense for my own personal situation – thank you!

Starrystarrynight

A grant wouldn't need to be repaid.

Mother_soontobe_Teacher

Many Thanks! I understand that for the grant, but was just wondering regarding the £4,450.00 loan. I am a bit confused whether putting it in a savings account or using it to pay mortgage would make sense finically or if I'd be loosing money. Thank you.

Gilbo_Baggins

As long as the account you post the loan and grant into pays a higher interest rate than what is charged on your loan them you will make some money out of it.

Helix

Gilbo_Baggins wrote: »

As long as the account you post the loan and grant into pays a higher interest rate than what is charged on your loan them you will make some money out of it.

Quite unlikely to find an account that pays more than RPI + 3%, which is what you would be paying whilst studying and potentially after depending on how much you earn.

Mother_soontobe_Teacher

Thank you for the replies.
This is what I have been thinking too. However, Might be moving soon and ‘upping’ our mortgage, so I am thinking this may be the ‘cheapest’ loan I ever get and would save me in the long term! Very tricky situation! Luckily, I am not going to be teaching maths!

Mother_soontobe_Teacher

So, do you guys know if I would be able to accept the full grant but not the loan?


Thank you

Pleut

I don't know about accepting one without the other. I'd give the Student Loan people a ring about that.
However, I've always been told that it's the best loan you'll ever get. Also, I guess if you shoved it into an ISA it might be better?

I think you can also pay back more of the loan than you -need- to if you wanted to just hold onto it for a little bit.

It gets cancelled out after 25 years anyway :P

Mother_soontobe_Teacher

Pleut wrote: »

I don't know about accepting one without the other. I'd give the Student Loan people a ring about that.
However, I've always been told that it's the best loan you'll ever get. Also, I guess if you shoved it into an ISA it might be better?

I think you can also pay back more of the loan than you -need- to if you wanted to just hold onto it for a little bit.

It gets cancelled out after 25 years anyway :P

Thank you! That's worth a go.


Yeah, I am under that impression too. But I am used to the old system - 1.5% or something, this new 6% is quite scary!

Ladyshopper

I did exactly what you did, took out full loan/grant last year and paid it off my mortgage. I figured it was a cost effective use of money and will help me get my mortgage paid off much quicker.

I do earn over £21k, but not by thousands, so when I start repaying next year it will be a minimal amount. Due to health reasons there is a chance in the not too distant future I might end up going under the £21k threshold, so again, for me it made sense to pay off the mortgage, as thats by far the largest bill in the household.

Ed-1

Ladyshopper wrote: »

I did exactly what you did, took out full loan/grant last year and paid it off my mortgage. I figured it was a cost effective use of money and will help me get my mortgage paid off much quicker.

I do earn over £21k, but not by thousands, so when I start repaying next year it will be a minimal amount. Due to health reasons there is a chance in the not too distant future I might end up going under the £21k threshold, so again, for me it made sense to pay off the mortgage, as thats by far the largest bill in the household.

When did you start and finish your course?