Student Loan Vs Mortgage Savings

tripletrouple

So we have a child going to University next year. We could (just about) cover the cost ourselves, or she could fund it via a student loan and we could put a substantial amount of savings away for her towards the deposit of a house when she finishes Uni and gets a job. Would we be better to do this considering that the student loan isn't so much a loan and more of a contribution towards her education? If we fund the university then it will leave us with nothing to help her later. She is doing a science based degree and will certainly be within the earning threshold for repaying her loan very quickly, and should have the potential to earn over £45K within 20 years.

ThePants999

Personally I would 100% take out a student loan if it meant also being able to jump on the housing ladder after uni!

ceb1995

Take out the student loan, getting her on the property ladder will help her more long term. Bare in mind, you may still be expected to give her some funds by student finance for her living costs.

Pixie5740

tripletrouple wrote: »

So we have a child going to University next year. We could (just about) cover the cost ourselves, or she could fund it via a student loan and we could put a substantial amount of savings away for her towards the deposit of a house when she finishes Uni and gets a job. Would we be better to do this considering that the student loan isn't so much a loan and more of a contribution towards her education? If we fund the university then it will leave us with nothing to help her later. She is doing a science based degree and will certainly be within the earning threshold for repaying her loan very quickly, and should have the potential to earn over £45K within 20 years.

I'd save the money for a house deposit.

[Deleted User]

Personally I would do neither, kids of all ages should be allowed to stand on their own two feet,if she's going to get a good job after uni she will be better placed than many to get herself on the housing ladder.

Herzlos

Student loan is likely the cheapest source of credit she'll ever see and isn't regarded the same as regular debt for most purposes. You can always pay it off from the savings later, but it'd be much more useful to provide the money as a mortgage deposit and let her pay the loan off as she becomes eligible.

Pixie5740

Herzlos wrote: »

Student loan is likely the cheapest source of credit she'll ever see and isn't regarded the same as regular debt for most purposes. You can always pay it off from the savings later, but it'd be much more useful to provide the money as a mortgage deposit and let her pay the loan off as she becomes eligible.

Student loans aren't that cheap anymore but it's unlikely that many students will actually repay all the money before it gets written off, which happens 30 years from the April after graduation for those who started studying from 2012 onwards, especially if the student has taken maintenance loans as well as tuition fee loans.

Bizarrely, or at least something I find bizarre, is that everyone is charged the same interest rate whilst studying but then once you graduate the interest rate is on a sliding scale depending on how much you earn. Once you hit £25k income the more you earn the higher the interest rate. I honestly think you'd need to end up a high profile barrister earning £250k or similar to actually come close to paying off the loans before they're written off.

ThePants999

venison wrote: »

Personally I would do neither, kids of all ages should be allowed to stand on their own two feet,if she's going to get a good job after uni she will be better placed than many to get herself on the housing ladder.

Spoken like someone who got on the housing ladder at a time when "starter" homes didn't cost 10+ times starter salaries.

MallyGirl

Pixie5740 wrote: »

Bizarrely, or at least something I find bizarre, is that everyone is charged the same interest rate whilst studying but then once you graduate the interest rate is on a sliding scale depending on how much you earn. Once you hit £25k income the more you earn the higher the interest rate. I honestly think you'd need to end up a high profile barrister earning £250k or similar to actually come close to paying off the loans before they're written off.

The interest rate is the same for all. The amount you pay back is 9% of earnings above £25k so high earners would pay back at a faster pace but the rate of interest still being added to the loan is the same.

Pixie5740

MallyGirl wrote: »

The interest rate is the same for all. The amount you pay back is 9% of earnings above £25k so high earners would pay back at a faster pace but the rate of interest still being added to the loan is the same.

Not according to the Student Loans Comapny

https://www.slc.co.uk/students-and-customers/loan-repayment/interest-rates.aspx

Variable rate dependent upon income. RPI (3.3%) where income is £25,000 or less, rising on a sliding scale up to RPI +3% (6.3%) where income is £45,000 or more.

MallyGirl

I stand corrected - my apologies. I have it all in a spreadsheet that did all that bit for me so I had forgotten that bit