Student loan plan 5

bigcow76

Hi I’m like for any advice or thoughts to think about on my issue. For context I am A-level student studying physics maths and business expecting straight A’s. I will be completely a 4 year Physics MSci course with an industrial placement next academic year at Bristol university . My grandfather has offered to pay for all living costs however I believe he’s hoping to cover all rent, food and groceries so maybe not “all”. He is doing this as he has for all my siblings and cousins and am very fortunate. Because of this I am unsure on whether to take my whole living student loan. I have contacted and can simply ask for more or give back as much as I want each year to reduce or increase my loan. And so initially I expect to take the full loan payments to understand how much I will actually need and make a judgment before my last payment. Due to my household I have been offered the maximum loan. Therefore I feel I could have a large abundance of cash if I take the full loan amount which I will be charged interest on. And if I don’t take the full loan could pay it off quite quickly definitively (without unseen circumstances) in 30 years. Therefore I want any help, aid or advice in the matter to decide whether I should take the extra money of the loan even if not needed. I definitely will be getting a loan no matter what as I expect despite having everything paid for I may well use a couple thousand out of the 10 from “life”.   

silvercar

You are in crystal ball territory. 

If, you have a long and financially successful career ahead, it makes sense to borrow the minimum you need. You will pay off sooner and pay less interest overall.

However, if you fall into the middle- earners category, either from taking some years out of full time lucrative earning, or because your career path ends up being less well paid, you will end up with paying your student loan for 40 years and you will have lost out by taking less than your full entitlement (because your repayments will be the same as if you have taken the max loan).

Given you can repay lump sums as and when you want, it may make sense to take the max loan and invest what you don't need, or put it in a high interest account. Then when you start your career you could make a more informed decision. It may be that you have other uses for the money you have saved eg a house deposit.

bigcow76

silvercar said:

You are in crystal ball territory. 

If, you have a long and financially successful career ahead, it makes sense to borrow the minimum you need. You will pay off sooner and pay less interest overall.

However, if you fall into the middle- earners category, either from taking some years out of full time lucrative earning, or because your career path ends up being less well paid, you will end up with paying your student loan for 40 years and you will have lost out by taking less than your full entitlement (because your repayments will be the same as if you have taken the max loan).

Given you can repay lump sums as and when you want, it may make sense to take the max loan and invest what you don't need, or put it in a high interest account. Then when you start your career you could make a more informed decision. It may be that you have other uses for the money you have saved eg a house deposit.

Ok thank you so much. That’s kind of the conclusion I had come to. It’s a tricky decision when you think about it further. Think I will be taking the full loan initially and then decide after I’ve finished the degree like you mentioned