Do I Need a Student Loan?

cdm1

Can you tell it's that time of year?

Let me give you a background - I started university 10 years ago and graduated in 2011. After a few years of switching between jobs, I head back into study mode in a fortnight to undertake a PGCE in Secondary Computer Science.

Now, due to the passing of my father in 2009 and subsequent change in circumstance to a low-income household at that time, I received financial support during my degree years to such an extent that I DO NOT have any outstanding student loans.

Heading into this PGCE, I find myself fortunate enough to receive a £25,000 bursary over the duration of the course. My personal finance is good - I have roughly £22,000 put aside, of which £5,000 is in a Help to Buy ISA for use when it comes to purchasing my first home.

Over the next year, that ISA will grow to around £7,500, which is obviously boosted by 25% when it comes to making that move. With a £25,000 bursary on top of that - minus costs to keep myself going - I anticipate I could have a total somewhere in the region of £40,000-£45,000 at hand in 12 months' time.

Having looked into financing my upcoming course, a calculator suggests a loan of £9,250, combined with a starting salary of £22,917, would see a total of £11,010 repaid over the course of 21 years. There are, of course, variables to that such as career progression, but I'm unsure which route to take.

With the generous bursary that will be coming my way, there is a temptation to use a part of it to finance part/all of the course. Realistically, as I progress through the pay scales, it wouldn't be surprising if the loan was repaid in 15-20 years, or even less, which leads me to think - would I be better off paying up front, with the likely £2,000+ in interest payments being better served going towards eventual mortgate repayments.

On the base of it, I find myself in a very fortunate position to be receiving the £25,000 bursary. Many of my fellow PGCE 'students' who won't be teaching the same subject as me will receive very little or, in some cases, nothing at all and, as such, will be dependent upon the loan. As I won't be in that position, does anybody have any pointers as to which direction I should take?

Thank you in advance. :beer:

silvercar

You could always take the loan and then repay it soon after graduating. That will attract some interest, but it does leave your options open.

cdm1

I think I'd probably look at using an all or nothing approach.

If interest rates at the bank outperformed the level put on the loan itself, maybe it would be worth considering an investment of some sort.

As mentioned with the bursary, the amount I will receive is generous for my subject. Even taking the hit of a year's fees, I would still come out with just shy of £16,000 (tax free) and a healthy balance towards making that step onto the property market.

Clearly not all of that bursary would be put aside but there's no reason why, given my expenses of the last few years, I wouldn't be able to pocket £10,000 of it at the end of the course - perhaps even more.