What should I spend my student finance on?

My costs/expenses at least at the moment seem to not be so much and my student loan or student finance is just adding up in my bank account. I'm not too sure how I should spend it because I live with my parents and while I can of course help out, I would still have a lot left and I have no clue what to be spending all this money on

Reply 1

Anonymous #1

OP

Should I just let it add up and then use the money to get a house or

Reply 2

Theloniouss

Universities Forum Helper

21

Just keep it? You might need it at some point.

Reply 3

JMo03

15

I mean.. It's a loan. If you don't spend it, pay it back or save it. The less you spend, the less you'll have to pay back in the future

Reply 4

Anonymous #1

OP

Original post by Theloniouss

Just keep it? You might need it at some point.

Short term it seems fine to just let it add up but thinking long term I have been wondering about investing or doing something with it hmm

Reply 5

econ.person

12

Original post by Anonymous

Should I just let it add up and then use the money to get a house or

You’d struggle to use it as a down payment as you need to show your sources of income, and student loan isn’t income.

You could use it to buy a car. Often students buy a car after uni on lease, which would have a high interest rate. The interest rate on student loans is much lower.

Though I advise you return what you don’t need, especially if you don’t plan to buy a car anyway.

Note: This is not legal or financial advice.

Reply 6

Anonymous #1

OP

Original post by econ.person

You’d struggle to use it as a down payment as you need to show your sources of income, and student loan isn’t income.

You could use it to buy a car. Often students buy a car after uni on lease, which would have a high interest rate. The interest rate on student loans is much lower.

Though I advise you return what you don’t need, especially if you don’t plan to buy a car anyway.

Note: This is not legal or financial advice.

That is true however with a stable income (hopefully) then in the future it seems a good idea to have a decent amount saved. Down payment wouldn't entirely have to be from income. Car is out of the question for me. And for returning... why would anyone return it all in one go? What would be the logic or aim behind that exactly? I think I just have to find some good ways of investing

Reply 7

Anonymous #2

Yeah don’t do my mistake pls, I’m living with parents and have never worked, so when I first got my student finance I got so excited bc I never have had that amount of money in my life so I spent it on expensive coats, bags, jewellery and even bought my friends expensive gifts. I kind of regret it now, if I could give advise to myself last year I’d say save at least 60% of it if you can just for a back up.

Reply 8

econ.person

12

Original post by Anonymous

That is true however with a stable income (hopefully) then in the future it seems a good idea to have a decent amount saved. Down payment wouldn't entirely have to be from income. Car is out of the question for me. And for returning... why would anyone return it all in one go? What would be the logic or aim behind that exactly? I think I just have to find some good ways of investing

Downpayment doesn't need to be wholly from income, but I know from experience they scrutinise all savings to see how good a "saver" you are. Saving student loans doesn't help your case.

Fair enough, not everyone wants a car. I just find a lot of students getting cars on lease after uni and paying huge interest on it, but that clearly isn't you!

If you wanted to invest that money, then fair enough. However, you'd have to be aiming for high return investments (which comes with high risk) to outweigh the fact that your student loan will be accumulating interest. So essentially your rate of return would need to be higher than interest, which a regular savings account won't accomplish.

I'm not advocating for you to return it, just posing the idea. Very often, when students graduate their student debt is so high that their yearly repayments don't even cover the yearly interest added onto the debt. Thus their debt balloons year on year. You'll then find when yourself repaying it till the 30 year write off, which will total to a huge amount.

Savvier graduates will minimise their debt coming out of uni, so they are able to cover the yearly interest on the debt plus more, so that their debt decreases year on year. They may even repay extra if they don't have any higher interest rate debts (like a mortgage). Then they could wipe your debt in a shorter period, paying much less in total, and enjoying a student debt-free 40s/middle age.

However, if you think you're never going to repay the total amount anyway (due to low salaries in your desired career), then go for it and take the maximum in loans and don't bother repaying more than is neccessary. Though you can never tell these things in certainty.

Google repayment calculator and play around with the numbers and you'll see my point.

What should I spend my student finance on?

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