Strange Student Loan SituationWatch
My friend has taken out a student loan, her mum has set up a separate account for the loan to go into. My friend is not allowed to spend a single penny of the student loan so that she can "pay it all back as a whole". I don't understand the point of taking one out in the first place then? Are there any benefits to this? I thought if it was in an ISA account she could collect the interest but it seems a bit stupid for the sake of a couple of hundred pounds ?? Just curious and confused!
Secondly, there is no value to taking out a loan which is not used - in fact it is probably costing money. A few years ago, you could have put it in a savings account and got a good rate of interest on the original loan. However interest rates are now so low that it's pretty much pointless. Interest starts to be charged as soon as you take it out; in all likelihood, your friend is being charged more interest than the untouched loan is earning, meaning that she is actually losing money.
If you have understood the situation correctly (and some of it sounds implausible), then your friend's mother needs a lesson on how to manage money properly.