Pay off plan 5 loan ASAP?

hulkgti

Hi,
I've searched the forum but can't find this situation discussed.
My son is wanting to go to uni, but the huge debt is putting him off.
I have explained how they work, and it's like a tax blah blah...
We are both trying to work out if it is indeed much better to pay off ASAP with the new plan 5 loans being 40years?
He will be living at home so loan will be 27k tuition fees for 3 year degree.
He will work plenty and plans to pay £300 per month off during the 1st 2 years then maybe less for 3rd year.
We could then look at getting a lower rate loan or 0% credit card transfers if available.
Does this make sense to do? It appears the cheapest way of doing it to me! The student loan will soon rack up interest at 7%.
I imagine he will be a low/mid earner working full time for most of the following 40y.
Views & ideas welcome!

43722

Go to University. Move away from home. Worry about the rest later.

hulkgti

He doesn't want to move away. I keep suggesting it, but he's just not ready.

Kat78MFW

Has he looked into degree apprenticeships? This is a way to work alongside getting a degree and I don't think you have to pay the tuition fees.

silvercar

I imagine he will be a low/mid earner working full time for most of the following 40y.

Then take the max loan possible. Invest what he doesn’t need to live on or use it as a deposit for a home.

hulkgti

Kat78MFW said:

Has he looked into degree apprenticeships? This is a way to work alongside getting a degree and I don't think you have to pay the tuition fees.

Yes thanks but unfortunately they seem to be few & far between round here. One company does them but you have to go to a certain uni, that he hated. The couple of  others have come accross have an extensive application process consisting of tests, essays and group interviews, which he is just unable to do. He struggled for a year to get his current job in a shop due to application process. Companies say they are "disability friendly" but they are really not.

hulkgti

silvercar said:

I imagine he will be a low/mid earner working full time for most of the following 40y.

Then take the max loan possible. Invest what he doesn’t need to live on or use it as a deposit for a home.

But that would only work if you can guarantee the investment will rise over 7%. Or more....

Barkin

If he doesn't pay off the loan in full within 40 years (without making any additional voluntary payments) then it doesn't matter what the interest rate is on the loan, as he'll never pay it. 

silvercar

hulkgti said:

silvercar said:

I imagine he will be a low/mid earner working full time for most of the following 40y.

Then take the max loan possible. Invest what he doesn’t need to live on or use it as a deposit for a home.

But that would only work if you can guarantee the investment will rise over 7%. Or more....

Incorrect. If his earnings are not going to be high enough for him to pay it all off, the interest rate is irrelevant. The loan will be written off after 40 years and he will still have the investment.

43722

I understand and appreciate the view about staying at home, and am certainly not here to vex you or your son. But an important part of university life is the challenge of becoming independent. It would be interesting to read a few points of view from current and recent students.