Take masters loan and save, or pay for masters?

cmozz10

Hello All, 

Hopefully this is the right forum for this question. 

I’m looking for advice on whether to take the postgraduate student loan in the UK or not. 

Some context - I’m as working professional in London looking to study a part-time masters which costs £8,500. 

On average (outside of the pandemic) I can manage to save £5,000 a year based on my salary and lifestyle expectations. 

I’m 25 and currently saving heavily for a mortgage deposit and some nice holidays as a post-pandemic treat. 

So my question is - should I take the loan, with its interest, and deal with the repayments later (which will be £120 a month based on my current salary). The reason for taking the loan would be that I can continue to a) save for my mortgage deposit and b) save for nice holidays which will give me a sense of sanity whilst working full time and studying part time. 

Or should I just pay off the masters now, which will wipe out my ability to save for two years. 

I’m more inclined to just take the loan. But wondered if anyone had faced similar experiences or thought I was making a poor financial decision.

Cheers! 

Voyager2002

One question you might care to answer: when your mortgage lender decides how much you can borrow, they will of course base this decision on your salary. Would this be affected (reduced) by the payments you would have to make towards your student loan?

cmozz10

Good point. Yes - my payments would double from 110 to 220 a month (under and post grad combined). 

Although I am also hoping the masters will make me earn more, which will hopefully offset that. 

TheAble

The masters probably won't help future earnings in a meaningful way. As long as you've ticked the "has got a degree" box i.e. a bachelors, then that's good enough.

msallen

TheAble said:

The masters probably won't help future earnings in a meaningful way. As long as you've ticked the "has got a degree" box i.e. a bachelors, then that's good enough.

That depends very much on the specifics of the OPs job and the topic of the masters.

msallen

If you are already in stable employment, with enough spare income to save £5K then I'd be surprised if you couldn't get a standard personal loan at a more attractive rate than an official masters loan. You would also have the ability to pay it off early, separate from your main student loan, should you wish or if it would improve your 'profile' for getting a mortgage.

lr1277

msallen said:

If you are already in stable employment, with enough spare income to save £5K then I'd be surprised if you couldn't get a standard personal loan at a more attractive rate than an official masters loan. You would also have the ability to pay it off early, separate from your main student loan, should you wish or if it would improve your 'profile' for getting a mortgage.

I had a post-graduate loan about 25 years ago. The advantage for me at that time was that repayments did not start till after the course had finished. Obviously accruing interest in the meantime. I was not working in a permanent job at the time so this was a benefit.

This may not be a problem for the OP as they plan to continue to earn during the course.

TheAble

msallen said:

TheAble said:

The masters probably won't help future earnings in a meaningful way. As long as you've ticked the "has got a degree" box i.e. a bachelors, then that's good enough.

That depends very much on the specifics of the OPs job and the topic of the masters.

Possibly. It mostly depends though on how hard you work and how capable you are.