Masters loan and LISA

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My daughter will be starting a Masters degree this Sept using the new government post graduate loan.
She is in her final year of her undergraduate degree.


She has taken full tuition and maintenance loans for her undergraduate degree ( post 2012).


The maximum amount that she can take for the Master's loan is £10,000. This is also income contingent and is paid alongside the undergraduate loan at a rate of 6 percent of qualifying earnings.


This means that she will pay a rate of 15 percent of qualifying earnings, with the undergraduate loan at 9 percent and Master's at 6 percent. However , as they run alongside each other separately, the Master's loan will be paid off quicker.


She will only require approximately £8000 - £8500 of the Master's loan, not the full £10,000.


She is looking to open a LISA, with a view of buying a property in the future.


My question is this: Would it be worth her taking the full £10,000 loan and putting the balance not required into a LISA to give her a head start on her deposit savings?
Or is it best just for her to borrow what she requires.

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  • eskbanker
    eskbanker Posts: 31,454 Forumite
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    You, or perhaps she, would need to consider the interest rates on the loans (as opposed to the repayment schedule) and weigh them up against the return on the same amount in a LISA, both interest (once they're available in cash form, or assumed return on any investments if appropriate) and bonus....
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