Student Loan, should my son borrow the maximum loan?

IamWood

My eldest son is going to start university to study math at one of the best universities this year. He is offered the maximum loan for tuition fees and maintenance grants. I am able to help with his living cost. I wonder if he would be better off for him borrowing the maximum or just taking the tuition loan.

If all goes smoothly, he'd be expected to be a high earner after graduate.

All advice and comments are welcome. Thanks a lot!

kaMelo

Whilst you may expect him to be a high earner no one really knows for sure.
Let him take the maximum loan available, if you want to contribute anything put it in a savings account to go towards a house deposit rather than paying some of his university costs. He will thank you for it in a few years.

IamWood

I'd also like to add that he's already been awarded an annual scholarship of £4,000 during his studies.

Albermarle

IamWood said:

I'd also like to add that he's already been awarded an annual scholarship of £4,000 during his studies.

Normally even taking the maximum loan for tuition fees and maintenance , it usually needs a top up for living costs. The £4K will do nicely for that.
Personally I would take the maximum loan to start with, and then review after the first two years. You can maybe save some money to pay off some of the loan later is all goes to plan, or as suggested already to help with buying a house. If it looks like he really will be a high flyer/high earner, then maybe consider paying for the final year. 
A kind of hedging your bets strategy.

IamWood

Thanks to @Albermarle and @Kame

Very helpful advice!

MalMonroe

When I went to uni - and again when my daughter went - the advice was to take all the loans you are offered and put them in a savings account if you aren't going to use them. Interest rates for savings accounts were better then, though. 

But your son can always pay it all back when he's finished uni - and he won't have to do that immediately, either as this is what the government says -

The earliest you’ll start repaying is either:

• the April after you leave your course
• the April 4 years after the course started if your course is longer than 4 years, for example if you’re studying part-time or doing a Postgraduate Doctoral course

Your repayments automatically stop if either:

• you stop working
• your income goes below the threshold

In this link - https://www.gov.uk/repaying-your-student-loan/when-you-start-repaying.

It sounds as if your son has a bright future ahead, all the best to him.   

[*I've also commented on your other post about the fact that we're not allowed to double-post - the forum team can delete the other post for you though.]

IamWood

Thank you, @MalMonroe

silvercar

Given that student loans are more of a graduate tax than a loan,  the other section is probably a better place for this discussion.

your son will be paying back 9% of earnings above the threshold, whatever loan he takes. So unless he has a long well paying career, only taking part of his full entitlement won’t save him money. It’s a difficult calculation of future earnings, so until he starts his career and can judge future earnings more realistically I’d be inclined to take all he can get. Interest is charged straight away, so this isn’t without risk, but the majority of people won’t pay back their loan in full with anything unpaid eventually being written off.

silvercar

I’ve requested the discussion be moved to the student board.