Student Loan, not taking full amount

Martyparty

My daughter has been offered the full maintenance amount but has also had a relative offer to pay the accommodation fees for them as a gift. So they are in the very fortunate position of not needing the full student loan offered.

Is there a method of taking a lesser amount from the loan company and is that worth doing ?

Alternatively, if all the loan was taken, some of it could be put into a long term savings plan - maybe a LISA ? I understand that the headline interest rates don’t make sense at first sight but ML has explained that it’s not really a loan and that some folk will never have pay it all back anyway.

[Deleted User]

A S&S ISA is not a bad idea if you have the excess cash (maybe some in a LISA for the free money), you can whack in a lot and provided you know it is for 5+ years a S&S will give the best long term growth

ML is correct in part but hopefully your daughter will have a good job at the end and be paying it back - it's likely true not that many people will ever pay it back but they will always pay something once above the threshold

Martyparty

Thanks for the comments. I understand that it’s a crystal ball job to know what their earnings will be in the future. Maybe some folk have not taken the whole maintenance loan when they have external funding ?

Jami74

Martyparty said:

Is there a method of taking a lesser amount from the loan company and is that worth doing ?

Personally I would tell her to take the money! Maintenance loans are designed to be the minimum that the student needs, and often aren't really enough. Lots of students have jobs alongside their studies to make ends meet, skimp on healthy meals and don't go home as often as they'd like due to the costs. Having additional money might mean being able to do summer schools or internships or extra courses over the summer (instead of working) which could enhance her CV.

Does the relatives 'gift' have conditions attached? What happens if she drops out, or has to retake a year, would the relative still pay? Or gets a boy/girlfriend that you/your relative does not like? What about if their financial situation changes and they decide half way through the year that they cannot continue paying it?

If your daughter gets to the end of her university course with several thousand in savings due to not spending it and looks like getting a high paying job straight away, she could make a big payment on the student loan. If it looks likely she'll be a lower earner then she might decide to use it towards a mortgage deposit instead.