I’ve 50K savings should my daughter take a student loan?

pcftech

Hi,
My daughter will start uni next year. She is a Northern Ireland resident so plan 1 will apply. I’ve got 50k saved for her student finance. Should she take out loans or should we pay it using the 50k over 4 years? Or should we use the money for something else like a house deposit for her? It’s hard to say but she’s not into high tech or finance so don’t think she’ll be a top earner.

silvercar

That 50k could be a nice deposit. Saves on paying out as rent. If she is not going to be a high earner then it makes even more sense as repayments could be a lot less than the loan.

pcftech

Thanks, I don’t fancy buying a house for her to live in at uni. Wouldn’t be able to manage that. I was thinking more in the future when she leaves uni and want to buy her first house. It would help her get on the housing ladder quicker than saving for a deposit. Would that be better use of the money? And use student loans to get through uni?

redrosebud

Personally, I would say taking the student loan is the best option. You're talking about a low interest loan that has absolutely no impact on her credit file and doesn't have to be paid back until she's earning enough, and then is paid back very slowly. If nothing else, it gives you a few years' breathing space to decide how best to use the 50k, which may become clearer once she's finished uni. It may be that then you decide the most sensible option is to use the 50k pay off the loan, but if not you'll still have access to the 50k without having accrued very much interest on the loan, and having been able to accrue interest on the 50k in the meantime. It's really hard to make decisions on the future when someone's starting uni as so much can change in that time - once it becomes clearer what sort of job she's going to go into, when and where she might intend to buy a house, that may be a better time to make such a big decision.

Bizzywizard

Has she opened a LISA, she pays in a max of £4k a year and the government give her £1k a year on top, plus interest, this is for buying a house or pension in the future. Your £50k could go towards that (family can pay into a LISA). I would also opt for the student loan too! My daughter goes to uni in 2 years, so have two lots of money (£8,000) ready to go in a LISA once shes old enough. Any remaining money (from her saturday job) will go towards what she wants at uni. Hope this helps.