Should I take a student loan if I don't need it?

mksofa

About to do a PGCE and will get a bursary that would cover the course fees, can live at home "rent free". Should I take the student loans anyway and bank them to use as house deposit?

As a teacher it will be quite a few years before I become anywhere near a "high" earner? and as a female I am likely to have one or two years "out" of employment to have a family

JayRitchie

mksofa wrote: »

About to do a PGCE and will get a bursary that would cover the course fees, can live at home "rent free". Should I take the student loans anyway and bank them to use as house deposit?

As a teacher it will be quite a few years before I become anywhere near a "high" earner? and as a female I am likely to have one or two years "out" of employment to have a family

As a quick query how old are you and which part of the country might you be looking to buy a house and at what sort of cost?

Socajam

Why because it's free money and you won't have to repay if at all.
I think it's a dishonest idea and stealing from those who are in a less fortunate position than yourself.

mksofa

I will be paying back an extra 9% tax for most of my working life and teaching the children of those who don't have degrees yet earn more and do not pay the extra tax even if they are high earners. I am not sure that there is a moral dilemma - simply a question of whether or not this is a way for a teacher to be able to buy a house - because to be sure on a teachers salary I wouldn't be able to afford it for a long time?

kimplus8

Socajam wrote: »

Why because it's free money and you won't have to repay if at all.
I think it's a dishonest idea and stealing from those who are in a less fortunate position than yourself.

you could have said this minus the sarcasm in the first line.

mksofa

I asked the question because it is not "free" money - depending on circumstances I suspect it can be very expensive money - my question was addressed to those that might be able to do the calculations.

I was just wondering if anyone had modelled typical jobs like teaching, where unlike most careers its presumably easier to predict likely salary?

Socajam

kimplus8 wrote: »

you could have said this minus the sarcasm in the first line.

Yes, I could but it was very relevant to the question asked by the OP

Socajam

mksofa wrote: »

I will be paying back an extra 9% tax for most of my working life and teaching the children of those who don't have degrees yet earn more and do not pay the extra tax even if they are high earners. I am not sure that there is a moral dilemma - simply a question of whether or not this is a way for a teacher to be able to buy a house - because to be sure on a teachers salary I wouldn't be able to afford it for a long time?

I am 62 years old, started working at 16, no children, never claimed unemployment, so what's your question again.
You not being able to afford a house have nothing to do with taking the money when there are others whose need may be greater than yours.
You are planning to take the money for selfish reasons, wanting a house that you cannot afford.
But to hell with it, let's take a free education loan that I will not have to repay and to hell with everyone, so that I can deposit it in the bank to buy a house.

badmemory

If a multi millionaires child can take a loan then I see no reason why you shouldn't. Whether it is financially viable is a whole other question. The interest rate seems eyewatering.

MovingForwards

The issue will be when you come to apply for a mortgage and the question about how have you got your savings gets asked.

Lenders don't like loans for deposits.

spadoosh

People being douchebags to the OP here.

Lenders will only be interested in the affordability aspect of a student loan taking in to account the tiered repayment structure. Or a incredibly simple way around this is the OP take out a student loan, uses that to pay for her living costs and then puts in to savings whatever is left over from teh loan and any other incomes.

@ OP Theres just not an easy answer to this one.

If you qualify and stay on a fairly low pay rate for most of your career its probably going to be worthwhile taking out the loan.

If you progress quickly youll be repaying RPI + 3%.

Basicallly if you stick around the starting salary of around £25k it should be beneficial to take out the loan. If you progress quickly to earn more than £46k youll be paying interest of RPI + 3%, which is typically more expensive than youd pay in mortgage interest.

Theres 1001 variable with this. It might be worth taking out a loan knowing its going to be more expensive if property prices go like they have over the last 30 years, because the house price increase will be more beneficial than the cost of the borrowing. If they go south, you can be at a particularly expensive loss.

It used to be a case where it was more or less always worth taking the loan. Loads of people i know took the loan and just put it in a savings account and practically all of them benefited from it. the ones who didnt where the ones who essentially wasted the money (spent it on rubbish). This new system though it seems to be hit or miss. If you progress well youll pay more and it wont be worth it, if you stay near the bottom it will.


At the end of the day you're talking about £3k loan? Its not much in the way of a deposit (Appreciate its a start and a good chunk of money) so for me id keep it simple. I prefer to know exactly what will happen, with this, you just cant know.