Student Loan Advice

maninwhitecoat

Hello, i've not applied for my student loan yet, because i've not decided whether i want it or not. I can still apply, it just means i won't get any until next year, but i dont' mind this because i've got money saved from my gap year anyway.

What i want to know is how much interest of the student loan i have to pay back is. I will probably get £4195 per year for my loan, and i'm doing a four year course which takes it up to £16780 for my uni time. Wow, a lot of money.

However, i will have to pay thsi back of course with interest. They say that the interest at the moment is 2.6%, meaning i'll have to pay back 17216.28 in the first year, which will of course increase as i pay it back bit by bit. I do however have teh option of paying this all back in one go.

Because i don't intend on using this money, is it worth me taking it, and putting it into a high interest tax free account? And then at the end of it all, pay back in a lump sum teh £17K?

I understand that with an ISA account, you can only pay in £3000 per tax year, and thus i will be £1200 spare, which i don't really want to touch.

Anyone have any advice? Am i better off not applying for the loan at all, and using the money which i earn?

Many thanks.

Danh

mrak

Without exception, the interest rate on the student loan makes it the best loan you're ever likely to receive. With competetive ISA interest rates still close to 5%, I'd definitely recommend this if you can be disciplined with yourself (i.e., not just SPEND all the money!)

I suggest that you read some of Martin's guides to competetive savings accounts to consider after ISAs on this site. There's a tip about drip feeding surplus ISA money into a Halifax regular saver.. it takes a while to set this up, but if you're as hard up as I was as a student, then every little helps!

Good luck,

mrak

binary0110

Definitely apply for the student loan - if you save all of it you will not only make a small amount on interest (maybe 1-2% net - not much but still reasonable) but will have a deposit which you can use to buy your first house. A £17K loan fixed at the retail price index (which will probably remain at 2-3%) is much better than a mortgage at 5-6%!

As long as the interest rate for the student loan remains below the BoE base rate then it will always be worth taking out the maximum possible and paying it off as slowly as possible.

eenu

if your gonna take it and invest it then great....i am now graduated and on a PhD and have just spoken to the SLC today to ask them what i owe.....around £18k and the interest is like £50 a month or somthing daft. I don't know whether to leave it till i work....use my PhD money to get rid of it or just leave the country and try never to be found again

My advice....if you can get away without needing it then don't take it or take it and invest it.

BWZN93

If it were me and I didnt have to rely on the money for living expenses, id personally take the money and make some with it! Having recently graduated, I know the nightmare of having little money to set myself up with, and the money made would be a useful bonus to pay for flat deposits, shiny new suits and shoes etc....

If you still have enough money at graduation then it would be a rather nice chunk of a deposit for a mortgage, a very nice thing in this day and age!

Best thing is to do some sums and see what the overall picture is, but as it is such a low interest loan, it is probably worth your while taking it and then deciding at graduation whether or not to pay the chunk back or use it for other purposes.

Jo xx