Wizard Of Flaws
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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!
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Francis.C
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(Original post by Wizard Of Flaws)
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!
It is pretty stupid is all that can be said.
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Klix88
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Firstly, a student loan can only be paid into a bank account in the student's sole name. Her Mum could not have set up the account and retained sole control of it. The bank account cannot be in joint names either. At the very least, your friend should be able to get duplicate debit card/chequebooks from the bank if her mother has committed fraud by setting up the acvount and denying her access.

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.
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parentlurker
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This is madness. The interest rate on loans exceeds the saving rate, many parents don't realise interest rates have changed. Show her this http://www.moneysavingexpert.com/stu...n-fees-changes
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Tiger Rag
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This makes no sense at all. Why would you take out a loan just to pay it back? You're advised to take out the loan just in case you do need it for unexpected costs. (ie, if you live at home in first year and decide in second year you want to move out and need a deposit for a house or whatever)
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JC.
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Could be useful to have as, say, a large deposit for a house?
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