Turn on thread page Beta

Getting a student loan and not using it watch

    • Thread Starter
    Offline

    15
    ReputationRep:
    Is there any benefit in getting a student loan that you don't want, and then paying it all back after uni immediately? Would you get much interest/would it improve your 'credit rating' too?
    Offline

    14
    ReputationRep:
    As it's a free/very, very cheap loan I would say it's not worth it paying it back before you have to (they take repayments automatically from your >£15k salary). Cling on to it for as long as possible - put it in a high interest account. I also believe you don't need a credit check for an official student loan, so paying it back early is unlikely to do much for you.

    Your attitude to debt is admirable, however. I'm sure you'll go far!
    Offline

    0
    ReputationRep:
    (Original post by BrightGirl)
    Is there any benefit in getting a student loan that you don't want, and then paying it all back after uni immediately? Would you get much interest/would it improve your 'credit rating' too?
    Get it, but it in a savings account. current interest to pay it back is 0%. So you WILL make a profit at the moment. credit rating is a seperate issue.
    Offline

    0
    ReputationRep:
    I'm putting all of my student loan into an e-savings bank account and then intend on paying off the loan in the normal way. This way I'll have roughly 20k sitting in my bank account from the begining of my career, so if I ever get into trouble I'll have a good cushion.
    Offline

    0
    ReputationRep:
    I have been thinking putting a decent chunk of it into a fixed bond.
    Offline

    11
    ReputationRep:
    I'm putting mine into savings and paying it back as slowly as possible, it's the cheapest loan we'll ever get.
    Offline

    12
    ReputationRep:
    About putting it in a high interest account/bond, are you guys referring to the maintenance loan?

    AFAIK doesn't the tuition fee loan go direct to the uni?
    Offline

    0
    ReputationRep:
    Yeah, the mainenance loan. Although, if you're being privately funded then you can take out the tuition fee loan and the money that would've been put towards tuition can now be put into a savings account. I'm only doing maintenance though.
    Offline

    12
    ReputationRep:
    OK, thanks LadyJG
    Offline

    0
    ReputationRep:
    Proper SLC student loans have no impact on your ability to get credit unless you default on the loan, that is fail to repay it as required.

    I'd agree with comments from some of the others here, even if you don't think you'll need the maintenance loan/grants you might as well apply for what you are entitled, going just for the non-income assessed element makes it pretty straightforward. The cost of the interest on student loans is pretty much nothing so you can keep it in a savings account and actually profit. Then simply pay it back as slowly as is required via PAYE when you start work.

    As LadyJaneGrey, doing this will allow you to build up quite significant savings which are always useful.
    Offline

    0
    ReputationRep:
    The interest is not nothing. It is this year but a couple of years ago it was running at £40 a month when it was approx 4%. It will not be nothing for the majority of the time it is owed. Some peole are not comfortable with that.
    Offline

    17
    ReputationRep:
    I want to get a hold of as much as I can and then stick it in investment bonds.
    Offline

    0
    ReputationRep:
    (Original post by hypocriticaljap)
    The interest is not nothing. It is this year but a couple of years ago it was running at £40 a month when it was approx 4%. It will not be nothing for the majority of the time it is owed. Some peole are not comfortable with that.
    Apologies, I should have clarified that I mean nothing in real terms, not nothing. The current situation with 0% interest is pretty unique as you suggest.
    Offline

    12
    ReputationRep:
    (Original post by hypocriticaljap)
    The interest is not nothing. It is this year but a couple of years ago it was running at £40 a month when it was approx 4%. It will not be nothing for the majority of the time it is owed. Some peole are not comfortable with that.
    I suppose the thing for anyone doing this is to ensure that the rate of return obtained, once deposited, is greater than the interest rate charged on the loans.
    Offline

    0
    ReputationRep:
    (Original post by little pixie)
    I suppose the thing for anyone doing this is to ensure that the rate of return obtained, once deposited, is greater than the interest rate charged on the loans.
    exactly this and there is no guarantee that the unique circumstances current will continue.
    Offline

    0
    ReputationRep:
    I've got mine and am saving it, to jump start saving for whatever when I graduate. It's also nice to feel that if I really need money, I have it there.
    Offline

    15
    ReputationRep:
    Damn rich people, actually being able to afford to not use their loan :facepalm:
    Offline

    0
    ReputationRep:
    (Original post by hypocriticaljap)
    exactly this and there is no guarantee that the unique circumstances current will continue.
    Certainly the current 0% rate will go up, I think the trend of the ratest to be below savings rates will continue though.

    Looking at current rates, I expect the interest rate applicable from September 2010 will probably be 1.5%.

    The interest rate is based on the annual Retail Price Index (RPI) in March or the highest base rate of a number of major banks plus 1%; whichever is lower.
    Well, looking at current RPI, in March it'll probably be about 3%, whilst the "the highest base rate of a number of major banks plus 1%" will be lower so that will apply. It isn't clear whether it is the major bank base rates in March or another month, nor which are considered the major banks, but most banks tend to match the BoE base rate. That's currently 0.5% and I doubt that will rise soon, particularly not by March, so I think for 2010/2011 the interest rate will be 1.5%, still well below what savings rates are likely to be.

    (RBS, Llloyds, and Barclays base rates are all 0.5% currently.)
    Offline

    14
    ReputationRep:
    (Original post by AnythingButChardonnay)
    As it's a free/very, very cheap loan I would say it's not worth it paying it back before you have to (they take repayments automatically from your >£15k salary). Cling on to it for as long as possible - put it in a high interest account. I also believe you don't need a credit check for an official student loan, so paying it back early is unlikely to do much for you.

    Your attitude to debt is admirable, however. I'm sure you'll go far!

    this

    if u arent gonna spend it put it somewhere where it'll make money, speak to ur bank about it, find out what the best option is
 
 
 
Reply
Submit reply
Turn on thread page Beta
TSR Support Team

We have a brilliant team of more than 60 Support Team members looking after discussions on The Student Room, helping to make it a fun, safe and useful place to hang out.

This forum is supported by:
Updated: January 31, 2010
Poll
Do you want your parents to be with you when you collect your A-level results?

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Write a reply...
Reply
Hide
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.