Could Property Investment be a way to Pay Off Student Debt?

Studying for a degree can open up a lot of doors, but it also leaves most students with a lot of debt. £27,000 worth of tuition fees will normally be covered by a student loan, and on top of this there is commonly a maintenance loan to meet living expenses which will also eventually have to be repaid.

Those who actually study may find that universities are costing them a lot of money, but property investors seem to be in very much the opposite position right now. Student-focused properties in university towns are among the most profitable investments you can get. This leads some students and their families to wonder whether these two sides of higher education finances could be used to offset one another, and whether buying a student property investment might be a way to pay off the costs of an education more quickly and avoid being saddled with debt in the longer term.

Of course, any property investment could potentially provide an income stream for this purpose. Just because it is student debt it does not necessarily have to be paid with student property, but there are a few reasons why this sector is particularly appealing when it comes to lightening the burden of a student loan.

The first of these reasons is that a student property in the same location where a young person will be studying can potentially have practical as well as financial use. Potentially, it can be used as accommodation by the student in question, cutting living costs (the price of actually purchasing the property will remain tied up in its value, and hopefully even appreciate) and therefore reducing reliance on maintenance loans and the overall financial burden of studying. This also has the effect of eliminating the stress of finding a place to live.

After graduating, the investment can then be monetised in the usual way in order to generate extra income and help clear debts. Alternatively, others prefer to buy a student property with the intention of letting it out right away. This introduces some flexibility, such as the freedom to buy in a different student market which may have better forecasts or generate higher income than the student will be paying in rent in the place they want to study.

Another reason to choose student property as an investment for paying down student debt is simply that this is the UK’s top-performing sector right now. It offers lower outlays than most other property classes, with many investors able to buy a property outright, yet in recent years it has consistently delivered the highest yields.

The UK’s highest property price growth figures are already largely found in student markets. With the number of young people entering higher education in the UK on the rise and investors pouring billions of pounds into the sector as they seek to add these high-performing assets to their portfolios, student property has some of the most positive forecasts for its medium- and long-term future of any market.

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Peter Scully

Marketing Director at SF Media

Keen author and blogger. Peter writes on a number of topics he has a personal interest in, including brand promotion, marketing, social media, online marketing and small business advertising.