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New student finance

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With the new plan 5, I was debating whether it is now actually better to get as much loan as possible since its not likely to be ever paid off?
Son may be thinking about uni next year & initially plan was to just get 27k loan to cover fees (likely to live at home). Any thoughts? Or can anyone direct me to some sort of calculator/website with the new plan 5 costs?
He now doesn't want to go to uni due to the costs, so I'm trying to find as much info for him.
Thank you

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  • silvercar
    silvercar Posts: 47,365 Ambassador
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    He now doesn't want to go to uni due to the costs, 

    He needs to view it as a graduate tax, 9% of income over the threshold, rather than a loan.

    plan was to just get 27k loan to cover fees (likely to live at home)

    Bad plan. You get the worst of both worlds. Your son's repayments will still be 9% of everything over the threshold, whether his loan is 27k or 45k. Unless he is going to be a continuous and high earner he won't clear the loan before write off. So all taking a part loan does is give money to the government!

    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • hulkgti
    hulkgti Posts: 58 Forumite
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    edited 16 May 2023 at 9:19PM
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    Thanks for the reply.
    I agree that's definitely the case with the current scheme, but the new one lasts for 40 years. If he got a smaller loan, it could actually be paid off within 30 years, saving 10 years of 9% payments. Obviously it depends on interest and his earnings. I've calculated loosely for a 40k wage for most of his working life.
    Have I worked this out correctly?
    He is also like me and would definitely see it as a debt rather than a tax, which is what is putting him off going. My mum told me I couldn't go to uni as they couldn't afford it when I was that age but I'd like to encourage & help my own kids to go if they want.
  • silvercar
    silvercar Posts: 47,365 Ambassador
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    hulkgti said:
    Thanks for the reply.
    I agree that's definitely the case with the current scheme, but the new one lasts for 40 years. If he got a smaller loan, it could actually be paid off within 30 years, saving 10 years of 9% payments. Obviously it depends on interest and his earnings. I've calculated loosely for a 40k wage for most of his working life.
    Have I worked this out correctly?
    He is also like me and would definitely see it as a debt rather than a tax, which is what is putting him off going. My mum told me I couldn't go to uni as they couldn't afford it when I was that age but I'd like to encourage & help my own kids to go if they want.
    Inflation would have an effect on wages long term and who knows what changes to the thresholds will occur over the next few decades.
    if you are sure the loan will be repaid in full then you can justify taking a lower loan, if not would it be better to offer that money as a house deposit?
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
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