Student Loan musings……

Hi. Having got Covid recently i seem to be left with a bit of brain fog and dont seem able to think objectively about the student loan system. Hopefully someone could clear a few things up for me….
Basically my son has £40k inheritance to help pay his Uni fees and i am wondering whether he should pay for fees and maintenance out of this, or take the grants and loans route, with interest……..what factors are relevant?………i realise he could use the lump sum for house deposit…..but my brain is not working beyond this.
Any links to guides would be appreciated too.
Thank you kind people. 


  • silvercar
    silvercar Posts: 46,731
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    Here is your starting point on uni funding:

    This article in particular is worth a read for your situation:

    My short take on it, is that the loans are worth taking unless your son sees himself in a high earning long career. Otherwise the money would be better spent on a house deposit.

    Worst of all options is to do a half and half and end up with the same repayment for decades as if you’d taken the lot. Eg if total loans would be 50k and you only take 25k, but with interest charges increasing the loan and the repayments only reducing it slowly you end up paying the 9% over the threshold for most of your working life and the government would then wipe off the remainder, but you’ve chosen not to take the full amount and so effectively given the 25k to the government for no reason.
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  • It's a bet on how successful financially your son thinks he is going to be. The cut-off is roughly a teacher, I think. If he's going to earn more than that, better to pay the cost upfront and avoid the expensive repayments. If less, he'll never pay the loan back so it makes sense to take it.

    40k probably isn't enough to pay for three years at uni, though. Tuition is 28k alone. 

    The key point is that it's not a debt, it's a tax.
  • Take the student loans, and put the inheritance money in tax efficient savings to save for a house deposit or travel etc - start with £4,000 pa into a LISA - which gets topped up by government to £5000, and put the rest in best savings account you can get (may not be an ISA account.)  
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