Should I get a uni maintenance loan just to put it in a savings account?

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bex.anne
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Hi guys,

I never really thought about this before I read about it on an old thread.

I will be taking out the main student loan for the university fees (£9250), but I wont need one for living costs because of savings, bursaries, scholarships, family ect.

So I was just wondering, should I still take out the maintenance loan, its around £8,000 a year. I don't know much about ISA's but on other threads on here that i have read, people are saying it's wise to still take out a maintenance loan even if i dont need it and put it in an ISA account because you'll basically gain money from the interest rates they offer (but will this be more than the interest that the loan will accummulate, because as soon as i take out the maintenance loan the interest will start building up). Also, I might end up needing extra money whilst at uni so i guess its safe to have it there as a back up. I don't really want to end up in a lot of debt after uni and I am aware the student loan is low interest and most people dont end up paying it back, but i most probably will i think (studying medicine) so I want it to be as low as possible.

So what do you guys think, take out the maintenance loan anyways and put it in a savings account? Or not take it out since I wont need it and its extra debt for no reason?
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claireestelle
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(Original post by bex.anne)
Hi guys,

I never really thought about this before I read about it on an old thread.

I will be taking out the main student loan for the university fees (£9250), but I wont need one for living costs because of savings, bursaries, scholarships, family ect.

So I was just wondering, should I still take out the maintenance loan, its around £8,000 a year. I don't know much about ISA's but on other threads on here that i have read, people are saying it's wise to still take out a maintenance loan even if i dont need it and put it in an ISA account because you'll basically gain money from the interest rates they offer (but will this be more than the interest that the loan will accummulate, because as soon as i take out the maintenance loan the interest will start building up). Also, I might end up needing extra money whilst at uni so i guess its safe to have it there as a back up. I don't really want to end up in a lot of debt after uni and I am aware the student loan is low interest and most people dont end up paying it back, but i most probably will i think (studying medicine) so I want it to be as low as possible.

So what do you guys think, take out the maintenance loan anyways and put it in a savings account? Or not take it out since I wont need it and its extra debt for no reason?
Take a small amount in case you need it but since the loan interest is 5.5% ish from the day you take it out you couldn't make a decent if any profit by saving it these days.
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John10101
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lol take as much of it as possible, after 30 years it stops anyway so its basically free money.
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Smile88egc
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Student loans are no longer low interest and you are highly unlikely to make any money from investing it like you could 2 or 3 years ago.
My advice is don't take out any more than you need to (it's not all or nothing so you can opt to take as little as you like).
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Smile88egc
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If you have well off family you could offer to borrow from them and pay them 3% interest (roughly what they wouldearn in a savings account) as this would still easily be lower than the interest you would pay on a student loan.
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YaliaV
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Don't you have to declare any scholarships, bursaries, family income etc? You may not get the full amount.
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IWMTom
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It's one of the lowest interest loans you'll ever get in your life; it's worth taking even if you are just going to squirrel it away.

It's always helpful to have money on hand!
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Doones
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(Original post by IWMTom)
It's one of the lowest interest loans you'll ever get in your life; it's worth taking even if you are just going to squirrel it away.

It's always helpful to have money on hand!
The student loan interest rate is 3%+RPI which means it's currently 4.6%.

A Cash ISA generally earns about 1% these days.

Not worth doing...

Also, if OP is in the fortunate position of having enough household income not to need one, they probably will only qualify for the lowest amount of maintenance loan (2017/18 £3,928).

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Tiger Rag
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You never know when you may need it. For example, some people who lived at home for first year, move out for second. They take the loan and use that as their deposit for the second year. It also means that if for whatever reason your loan is delayed for second year, you've got some money there if you need it.

It has one of the best payment plans (you only pay it back once you reach £21k per year and it's wiped after 30 years) around.
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IWMTom
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(Original post by Doonesbury)
The student loan interest rate is 3%+RPI which means it's currently 4.6%.

A Cash ISA generally earns about 1% these days.

Not worth doing...

Also, if OP is in the fortunate position of having enough household income not to need one, they probably will only qualify for the lowest amount of maintenance loan (2017/18 £3,928).

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I don't think you read my post correctly - I said it's the lowest interest loan they'll ever get, NOT that they would profit from it.

Bearing in mind the amount OP would pay each month doesn't change, and only the duration does, it makes financial sense to take it and put it towards a mortgage or a car where financing is of a much higher interest rate.

EDIT: Just did the calculations, and assuming a starting salary of £30,000, the debt would be wiped before OP repays it all anyway (and that's just tuition).
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bex.anne
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(Original post by IWMTom)
I don't think you read my post correctly - I said it's the lowest interest loan they'll ever get, NOT that they would profit from it.

Bearing in mind the amount OP would pay each month doesn't change, and only the duration does, it makes financial sense to take it and put it towards a mortgage or a car where financing is of a much higher interest rate.

EDIT: Just did the calculations, and assuming a starting salary of £30,000, the debt would be wiped before OP repays it all anyway (and that's just tuition).
So if I were to get the maximum loan £9+8K for 4 years (NHS pays for years 5+6 of medicine), thats £68,000, would the debt end up being wiped off before I payed off all of it?
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Doones
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(Original post by bex.anne)
So if I were to get the maximum loan £9+8K for 4 years (NHS pays for years 5+6 of medicine), thats £68,000, would the debt end up being wiped off before I payed off all of it?
Are you sure you qualify for the max maintenance loan?

Also you don't receive the tuition fee loan. It is paid direct to your university.

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bex.anne
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(Original post by Doonesbury)
Are you sure you qualify for the max maintenance loan?

You don't receive the tuition fee loan. It is paid direct to your university.

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Oh okay I didn't know that. I've just checked and I'd get around £6,500 in maintenance loans, but I also get around £4,000 from scholarships and bursaries (which is the same price as my rent). Not sure if I should bother taking out the £6,500 because I won't really need that much extra would I?
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IWMTom
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(Original post by bex.anne)
So if I were to get the maximum loan £9+8K for 4 years (NHS pays for years 5+6 of medicine), thats £68,000, would the debt end up being wiped off before I payed off all of it?
Obviously, it depends on how much you earn, but even basing it just on 4 years tuition at £9,250 you would need a starting salary of £30,000 to pay it off entirely within the 30 year period (and that's accounting for inflation, and salary increases).

Have a play around with Martin Lewis' calculator at http://www.moneysavingexpert.com/stu...nce-calculator to see a visual representation of how things work - I'd take whatever SFE will give you if I were you; it makes sound financial sense.


(Original post by bex.anne)
I've just checked and I'd get around £6,500 in maintenance loans
Based on these figures, you'd therefore need a starting salary of around £42,000 to pay it off within 30 years.
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Doones
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(Original post by bex.anne)
Oh okay I didn't know that. I've just checked and I'd get around £6,500 in maintenance loans, but I also get around £4,000 from scholarships and bursaries (which is the same price as my rent). Not sure if I should bother taking out the £6,500 because I won't really need that much extra would I?
Are you sure the bursary is not means tested? Often they are only available if you qualify for the max maintenance loan, or sometimes they are still available but at reduced levels depending on household income.

Also your rent seems relatively cheap. Which university is this?

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Kvothe the Arcane
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(Original post by Doonesbury)
Are you sure the bursary is not means tested? Often they are only available if you qualify for the max maintenance loan, or sometimes they are still available but at reduced levels depending on household income.

Also your rent seems relatively cheap. Which university is this?

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£4000 for rent isn't that cheap for a shared 44 week tenancy.
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Smile88egc
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In medicine you will likely earn enough to pay it all off before it's wiped, your salary starts at around 26k and you can expect to be on 40k by 5 years, 45k by 7 years after you graduate.
Find a junior doctor to speak to about this as you are being given some bad advice above!
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Smile88egc
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Remember too that interest is charged on a student loan from the day you take it, so even putting it in savings, you'd be losing money from day 1. If you don't take a maintenance loan for first year, it doesn't mean you then can't take one in second year if you find you need cash.
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Doones
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(Original post by IWMTom)
xxx
SFE interest rate is increasing to 6.1% in September.

https://www.theguardian.com/money/20...flation-brexit

"But from September this [SFE interest rate] will rise to 6.1%, made up of the March 2017 [RPI] figure of 3.1%, plus 3%."
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IWMTom
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(Original post by Doonesbury)
SFE interest rate is increasing to 6.1% in September.

https://www.theguardian.com/money/20...flation-brexit

"But from September this [SFE interest rate] will rise to 6.1%, made up of the March 2017 [RPI] figure of 3.1%, plus 3%."
That may be true, but the RPI is always moving up and down. It can be 3% this year then 0.5% the next.

You must consider that as the RPI rises, as do any other interest rates linked to it (certain tracker mortgages for example)
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