Repay Student Loan to claim Universal Credit

[Deleted User]

This is a crazy situation. There's absolutely no point in paying off student loan, since he appears to have nothing to do with his days, he should be aware of this (three years with interest accruing, unless he miraculously finds well paid employment, he will never fully repay the loan).
Unless he has a medical condition, he won't be allowed to linger on UC for very long.

I'm sure this isn't what you want for him. Would a visit to the doctor be beneficial, to perhaps check for depression?

If he's just apathetic or anxious (smoking weed seems to be the common cause), I fear that he just needs to get on with it.

So frustrating as a parent, hope it works out for you (and him).

HillStreetBlues

Lowtrawler said:

This is one of the reasons why I think claiming UC might be useful - he will receive support and guidance on applying for jobs. I have tried to encourage him to go to the University careers service and take professional careers guidance but he has refused. He won't let anyone review his CV and he won't talk about how he is searching for roles. He lives alone and has a limited group of friends to provide support. I figure if he is claiming UC, he will have no choice but to talk about these things and take action?

I do see you POV, it's more paying off a debt that might never have to be repaid I feel the issue (this being a money saving site)
If concerned about the NI issue, take advice as the money might be better spent in buying the credits but  this has it own pitfalls as might never need those credits.

Lowtrawler

[Deleted User] said:

This is a crazy situation. There's absolutely no point in paying off student loan, since he appears to have nothing to do with his days, he should be aware of this (three years with interest accruing, unless he miraculously finds well paid employment, he will never fully repay the loan).
Unless he has a medical condition, he won't be allowed to linger on UC for very long.

I'm sure this isn't what you want for him. Would a visit to the doctor be beneficial, to perhaps check for depression?

If he's just apathetic or anxious (smoking weed seems to be the common cause), I fear that he just needs to get on with it.

So frustrating as a parent, hope it works out for you (and him).

He has always been a loner and has never liked taking advice or help. He graduated top of his class with a 1st class honors and so he is very intelligent. We hoped that attending university may make him more social and this worked for his first year but then lockdown came along and his remaining time at University was remote. It meant he never received any career guidance nor had any opportunity to discuss how others were seeking jobs. He lacks any understanding of how graduate recruitment happens and so never engaged in any of the graduate recruitment programmes. In essence, he became more of a loner and isolated.

Prior to lockdown, he was headhunted through the University by a large Chinese employer who wanted him to spend summer in China for work experience but this obviously fell through. He won't talk to us about his job search and so we don't even know what sort of things he is applying for, or even if he is participating in a job search. At his current rate of spend, he could survive another 3 years on savings.

I have used my contacts to propose possible roles he could apply for (around 10) but he never followed through on any. At this stage, we would be happy for him to stack shelves in Lidl.

Lowtrawler

HillStreetBlues said:

Lowtrawler said:

This is one of the reasons why I think claiming UC might be useful - he will receive support and guidance on applying for jobs. I have tried to encourage him to go to the University careers service and take professional careers guidance but he has refused. He won't let anyone review his CV and he won't talk about how he is searching for roles. He lives alone and has a limited group of friends to provide support. I figure if he is claiming UC, he will have no choice but to talk about these things and take action?

I do see you POV, it's more paying off a debt that might never have to be repaid I feel the issue (this being a money saving site)
If concerned about the NI issue, take advice as the money might be better spent in buying the credits but  this has it own pitfalls as might never need those credits.

I should probably point out that he went through the Scottish system for student loans and so he will have exited University with around £29k of loan + interest. He would be able to repay around £23k of that while retaining £6k in savings and so even a relatively modest job would see him repaying the student loan within his lifetime (unlike the English system). If he used his savings to pay down the student loan to get UC, should he get a £35k job, the remaining loan might even be repaid within 2 years. Hence, it's perhaps not as stupid to do this as it would be for an English student loan. Still stupid, just not as stupid.

Fundamentally, he needs a kick up the backside to get a job and this might only come if he is on UC.

kaMelo

You are vastly underestimating how long it takes to repay a student loan. On a £35,000 salary the repayment of a plan 2 loan would be just under £700 a year. Given that interest is still acruing a more realistic time frame to repay £6000 would be over a decade.

Unless a graduate is earning  six figure salaries, voluntarily repaying a student loan early would be unwise, to do so whilst unemployed with the sole purpose of being to claim UC is absolutely nuts.

[Deleted User]

kaMelo said:

You are vastly underestimating how long it takes to repay a student loan. On a £35,000 salary the repayment of a plan 2 loan would be just under £700 a year. Given that interest is still acruing a more realistic time frame to repay £6000 would be over a decade.

Unless a graduate is earning  six figure salaries, voluntarily repaying a student loan early would be unwise, to do so whilst unemployed with the sole purpose of being to claim UC is absolutely nuts.

Depending on the level of student loan, it can be beneficial to repay at far lower salaries than £100k (unless choosing to invest elsewhere, say a global tracker). For someone earning around £70k the costs are substantial if they don't make additional payments. Student Loan Calculator

In OPs situation, they would be crazy to overpay at this moment.

Grumpy_chap

Lowtrawler said:

My son left University 3 years ago and has not had a job. He has also been unable to claim any benefits because he was gifted money by grandparents which means his savings exceed the Universal Credit limits.

As I understand it, repaying loans does not count as deprivation of assets. Could he repay enough of his student loan to take his savings below the Universal Credit savings limit in order to claim benefits?

Paying (or early repayment of) student loan is like paying a tax.

Paying a lump sum of tax so that eligibility for UC is preserved seems rather counter-intuitive.

Irrespective, somehow, he needs to be jolted into a purposeful future.  It does not need to pay well if the corporate world is not for him.  Charity work / volunteer work would be just as purposeful.  Or travelling to meet and learn about different cultures.  Within whatever he chooses as his path, he needs to learn his own money management.

As his parent, you can only suggest and guide his path, and not facilitate turns that are not supportive, but need to allow him sufficient freedom to make and learn from his own mistakes.  That might include (however much you will disapprove) him squandering his inheritance, that might be one of the mistakes.

8dayweek

Are you certain he’s not spent all his Savings? His reluctance to engage with you in a discussion about this might be because it’s all already spent - and he’s already living on UC.