Pay off 10K for uncompleted degree?

sueysong

Our son completed only one semester of music degree at Manchester uni before becoming ill and leaving the course. One year on he has 10K of debt at 4.6% interest. He is has no idea now what he wants to do but he's still only 20 and may want to study in future. Should we use half our savings and pay this off for him (with the happy hope he can pay us back when he is earning) to stop it becoming a compounding nightmare or just let it grow into a monster? I'm presuming if we paid it off and he then went back to uni in future that would've been a waste of 10K?
Anybody clever out there who has some good thoughts?

silvercar

I'm presuming if we paid it off and he then went back to uni in future that would've been a waste of 10K?

This is true. Any future loan would mean he would have repayments to make (9% of anything earned over £21k), so all you have repaid will have been for nothing unless he ends up paying all the future loan back.

I would hang fire. Unless you can repay it without any worry of him repaying you in the future, I wouldn't bother.

Ed-1

sueysong wrote: »

Our son completed only one semester of music degree at Manchester uni before becoming ill and leaving the course. One year on he has 10K of debt at 4.6% interest. He is has no idea now what he wants to do but he's still only 20 and may want to study in future. Should we use half our savings and pay this off for him (with the happy hope he can pay us back when he is earning) to stop it becoming a compounding nightmare or just let it grow into a monster? I'm presuming if we paid it off and he then went back to uni in future that would've been a waste of 10K?
Anybody clever out there who has some good thoughts?

Don't pay it off. In any case the interest rate drops from RPI + 3% to RPI in the April after you leave a course. So at the moment the rate will be 1.6%, rising to 3.1% in Septemver based on this year's March RPI.

When earning over £21,000 the rate increases with earnings up to RPI + 3% AT £41,000.