UK_StudentLoan_SelfFinance_What-If_Analysis.xlsx

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1	Notes	Few important bits about the Student Finance - The finance is available for Tution fees (approx 9500/ years) + Maintenance cost or Leaving Expense (upto max 13K approx) - The Maintenance cost finance amount depends on house hold income, for kids of high earners it could go down to approx 5K instead of 13K - The loan is for 40 years, if one is unable to pay in 40 yeras remaining amount is written off - The current interest rate is = RPI (as of Sept-2025), for the academic year 2025-26 it 3.2% - Expect the interest rate to change every year as per RPI, there is cap of around 8% during period of higher inflation during 2023-24 period. When the API was above 13% - You start paying loan once you earn > 25000 - The monthly payment remains the same irrepective of the change in RPI or interest rate. That means the interest rate goes up it will take longer to pay off the loan and if it goes down it will take less time to pay off - The monthly payment = 9% of the money you earn > 25K - Your liability to pay remains even if you move abroad - This is not like any other loan like auto loan or mortagage. >> The is no entry/ impact on credit score >> The loan is written off after 40 years >> There is no penalty for repayment, you can pay off the loan any time you want
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3	Motivation	The main motivation for preparing the what-if analysis sheet for student finance are as follows - To help one make a decision on pay upfront vs take finance - To help the kids understand what they are getting into, wel come to adulthood, more responsibility and more accountability. :)
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5	How to?	How to use this tool? - Inputs: enter the inputs here - Loan Simulation: Provides the idea on monthly payment, interest, loan balance and ISA balance - Comparision: Provides you an idea on growth of ISA balance (starting ISA balance is considered as same as the loan debt). Also includes a table showing the time it takes to pay the loan, total life time income based on two key inputs the starting salary and yearly growth in the salary - Charts: provides a chart showing the ISA Balance Vs loan balance over a period of 40 years
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8	Reference
9	Interest Rate	https://www.gov.uk/government/news/student-loans-interest-rates-and-repayment-threshold-announcement--6
10	Nice summary of student finance	https://www.prospects.ac.uk/applying-for-university/student-loans-and-finance
11	Few important bits on Student Finance from Martin Lewis	https://www.moneysavingexpert.com/students/student-loans-england-plan-5/
12	Pay Ufront or take Finance	https://www.moneysavingexpert.com/students/should-i-get-student-loan/
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