Should I pay for my final year rather than a loan?

jdy

Hi,

So I started University in September 2014, I've done 3 years, one of these being a placement year, and have taken tuition fees for all 3, so totalling about £19,000, I have no other loans. I have the ability to pay for final year out of my own money, rather than adding to my loan.

I would hope/expect to start on a Grad salary of £30K+ considering what I earned during my placement. So should I pay for the final year or add to my loan?

Thanks

DavidT67

Suggest you read Martin's articles on the "graduate contribution" as "student loans" should more accurately be described.

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

jdy

Hi,

Yes I had read through that, which made think wether or not I should personally pay for the final year. Trying to work out which way I'd be better off.

Thanks

Voyager2002

One rational approach to decision-making is to minimise the chances of the worst outcome...

In your situation, the worst outcome would be needing money (perhaps to meet the costs of moving to a new place to start a new job; perhaps to fund an internship; generally in order to do whatever is needed to move on to the next phase of your life). Now, if you take the loan and save the money it is probable that you will have enough money for whatever comes after graduation: the chances that you might get stuck on some way for lack of a few bob are slim. OTOH if you use your savings to minimise your debt you run this risk. And as for the downside: if you take the loan and then do move on to a financially stable life-situation the cost of your 'mistake' would be a relatively small amount of interest, since you could then use your savings to pay off much of your loan as soon as you knew that those savings would not be urgently needed for something else.