Letting student loans collect interest.

I was thinking if it was allowed for me to take out the student loan to pay off my tuition fees and then the money for accommodation I can put in a bank for the 3/4 years.

Then scrape off the interest it creates and pay back the money(which will be untouched) at the end of my time at University. If I go to the University that I want then it would only be roughly an hour commute to it. I guess around ~~£100~~£45 a week in travel costs, which will be much less than living in student accommodation.

So I'm wondering if this is plausible and allowed?

Thanks

(edited 13 years ago)

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Reply 1

TShadow383

Original post by CoffeeStinks

I was thinking if it was allowed for me to take out the student loan to pay off my tuition fees and then the money for accommodation I can put in a bank for the 3/4 years.

Then scrape off the interest it creates and pay back the money(which will be untouched) at the end of my time at University. If I go to the University that I want then it would only be roughly an hour commute to it. I guess around £100 a week in travel costs, which will be much less than living in student accommodation.

So I'm wondering if this is plausible and allowed?

Thanks

Nowhere I've ever lived has cost me more than £87.50 a week.
My share in my current flat costs me about £80 a week, and it's a really nice flat...

Reply 2

Callipygian

You get less money from the student loans people if you live at home when you are at uni.

Reply 3

TheFlyingDutchman

Original post by CoffeeStinks

I was thinking if it was allowed for me to take out the student loan to pay off my tuition fees and then the money for accommodation I can put in a bank for the 3/4 years.

Then scrape off the interest it creates and pay back the money(which will be untouched) at the end of my time at University. If I go to the University that I want then it would only be roughly an hour commute to it. I guess around £100 a week in travel costs, which will be much less than living in student accommodation.

So I'm wondering if this is plausible and allowed?

Thanks

Yes you should take out a full student loan. It is the best interest rate you will ever get in your life.

Why you in such a rush to pay it back after uni ? I'd save it and put it on the downpayment for my house or something like that.

Take the full loan out. You are entitled to it as a student, not like it's a bursary. They will take the money back themselves out of your pay and this might sound weird but it's the cheapest money you'll ever be able to get. Think about it :wink:

Reply 4

GodspeedGehenna

Arn't you fined for paying it back in one lump sum?

Reply 5

jimcatinnes

Original post by Callipygian

You get less money from the student loans people if you live at home when you are at uni.

Not if you "live at your Nan and Grandads as their carer"...

Also I thought that the student loans taken out from a certain year the interest on them has gone up or something.

(edited 13 years ago)

Reply 6

username33685

In this current climate with extremely low interest rates for savers you may only make a couple of hundred quid in 3/4 years if you are lucky. Not worth the hassle imo

(edited 13 years ago)

Reply 7

TheFlyingDutchman

Original post by GodspeedGehenna

Arn't you fined for paying it back in one lump sum?

Yes I think so.

Paying it back is completley illogical. You are essentially assuming you will never need a loan of any form for the rest of your life and if you do need a loan then you will have given back money at a lower interest rate to take out money at a higher one :s-smilie:

Reply 8

xoxAngel_Kxox

Well this is what I'm doing at the moment, although obviously being on the old system still, there's nothing stopping me paying the whole amount back at the end of the course, whereas with the new system I don't think it would work quite the same.

Reply 9

TheFlyingDutchman

Original post by rich2606

In this current climate with extremely low interest rates for savers you may only make a couple of hundred quid in 3/4 years if you are lucky. Not worth the hassle imo

Halifax have a 4 year fixed rate ISA going on atm. 4.25% interest rate for 4 years and you can put up to 5k in every year.

Year one she has 5k to start

end of year one she has 5212.5

She puts next years 5k in and now has 10212.5k

end of second year 10646.5
puts 5k in and has 15646.5

end of third year she has 16311.5k

puts in 5k 21311.5k

end of 4th year she has 22217.2k

at 2% student loan interest. Which I think it is this year. She has to pay back 20400 meaning she makes over a grand ... for doing nothing.

Reply 10

CoffeeStinks

Original post by GodspeedGehenna

Arn't you fined for paying it back in one lump sum?

Probably true but I don't understand why they'd penalise you?

Could you or someone else explain this to me please. :redface:

Reply 11

mummyperson

This is exactly why the wealthy parents are in favour of student loans it is easy capital for their children. For the rest of families whose children have to use the money to live on whilst studying it isnt such a great deal.

Reply 12

CoffeeStinks

Original post by mummyperson

I'm not saying that I'm rich by any means. If I was going to stay in student accommodation I'd definitely use the money for that. But since I'll probably stay at home I still want to be able to take out the same loan but keep it.

Reply 13

Broderss

Put it in an ISA and yes you are allowed to do this because it is just like any normal loan so it is your money!

Reply 14

Broderss

Original post by TShadow383

Nowhere I've ever lived has cost me more than £87.50 a week.
My share in my current flat costs me about £80 a week, and it's a really nice flat...

what about the extra costs such as food etc that you pay for when living away from home?

Reply 15

callum9999

Original post by CoffeeStinks

Probably true but I don't understand why they'd penalise you?

Could you or someone else explain this to me please. :redface:

I thought that was only for new students who will be under the new funding regime. The reasoning behind that is presumably the interest is higher, so the government make more money off the loan - and paying it back loses that for them.

I don't remember this being mentioned when I took out my loan, but then I didn't pay that much attention because I would have taken it out regardless of any conditions.

Original post by TShadow383

Nowhere I've ever lived has cost me more than £87.50 a week.
My share in my current flat costs me about £80 a week, and it's a really nice flat...

Well that seems unusually low for student halls, I pay about £120 a week. £100 travel costs a week sounds ridiculous though.

(edited 13 years ago)

Reply 16

TShadow383

Original post by Broderss

what about the extra costs such as food etc that you pay for when living away from home?

Okay, including everything I eat and drink we're talking probably £120 a week to live here.
Although even the nice catered halls here are like £116 a week.

Personally, I'd say the extra £20 per week or so would be well worth it for the improvement in social life.

Original post by callum9999

Well that seems unusually low for student halls, I pay about £120 a week. £100 travel costs a week sounds ridiculous though.