Better to use savings or get a postgrad loan for Master's degree?

tartancushion

I'm thinking about doing a part-time MA while I work. I have a small amount of savings, enough to cover my MA fees, and I would still be earning and saving while studying for the MA. I think I would feel more reassured leaving my savings untouched and taking out a postgrad loan instead, but is that a stupid idea considering that I'll be charged interest on the loan? I wouldn't need the full amount of the loan as my course is cheaper than £11k and I suppose I could just borrow half of what I need for fees and then use savings to cover the rest.

tehone

I personally would borrow the the money for the MA, you can always make a different decision in the April after the end of the course what you want to do about repayments - the amount of interest that will have accrued at that stage won't be significant, compared to the peace of mind of still having savings if required

tartancushion

Thanks. I'm leaning towards doing that, purely for peace of mind. I was trying to work out how much interest the loan would have accrued at the end of 2 years but it's hard to find info on the government website about how the interest is calculated (monthly or annually?). 

Masomnia

Tricky one. The current interest rate being 5.4% I'd think twice. That's relatively expensive in the current climate. I'd be weighing up whether you're earning, how quickly you could work on replenishing the savings, how secure you feel in your job, if you're not overly worried about getting a job post graduation, keeping the job post-graduation, whether or not you're likely to pay off the loan...

I'm going to be doing some post grad qualifications soon and I'm going to get the funds from remortgaging. I looked into it and I'm not eligible for a post grad loan for them, but I think if I was I would still go with the mortgage at less than 2% rather than a post-grad loan. The main advantage to the student loan imho is that if for whatever reason you lost your job, or had your earnings cut, you're not burdened in the same way. Or if you wouldn't pay the loan off then more could be end up being written off at the end than you'd save in interest.

Lots to think about.

Masomnia

Just to add a compromise could be to keep the savings and take the loan and then see how things are in a couple of years. If everything is going well you can always pay it off asap.

Voyager2002

Two relevant pieces of information:

1. Your income: would you need to repay most/all of the student loan?

2. How easily could you borrow, should you spend your savings on the course and then need money for something unexpected?