Too much Maintenance loan 18 March 2021 at 9:54AM in Student MoneySaving 3 replies 181 views

Louise97

My Daughter is a first yr midwifery student and gets over the maximum maintenance loan for her course, due to my very low income and the longer length of her course. She also receives the NHS non repayable annual bursary.  Due to the pandemic she will not use all her loan this year and has already put a few thousand into savings. Should she take all the loan she is offered for yrs 2 & 3 or just take less and reduce her debt please ?

inthezeroroom

If she is sure that she doesn't need it for living expenses then take a smaller loan, but if she is not sure then I think a bigger loan (or the max) and set it aside somewhere safe as it would be much better to use these funds if necessary than to go overdrawn or borrow another way (e.g. credit card). I think I would err on the side of trying not to take it if I could avoid it.

grumiofoundation

I disagree with the above poster - from the circumstances described I think take the max loan available.
The likelihood is that she will never pay all the loan back, if she does this is because she will be a high earner and the 'cost' will come in the future.

Money could probably be used more productively now e.g. house deposit or as above to prevent borrowing at higher rates. 

What are your daughters plans in the short/medium term. From your post it sounds like she will not necessarily just go and spend it. Money could probably be used more productively now e.g. house deposit or as above to prevent borrowing at higher rates. 

If it would be used for savings for a deposit then take a look at the lifetime ISA. If the alternative is to not take it she could put the money into this product - either way not spending it. In the event she will not be buying a house for 10+ years could even consider a stocks and shares lifetime ISA (comes with risk of investment loss but would hope over 10 years to beat cash). 

https://www.gov.uk/lifetime-isa
https://www.moneysavingexpert.com/savings/lifetime-isas/

suejb2

Take the loan and save it or invest it.