Do parents locally pay uni fees or do students take loans? Post Reply

[HenryHoover]

Quite timely given the news coverage of student loans today but would love some advice.

Our son who is in lower sixth is about to start applying to unis but my husband and I are divided on whether we pay the student fees or get him to take the student loan for the fees. This has been exacerbated by the fact that I mentioned to some other school mums what we were thinking and they looked horrified that I would see him saddled with debt, of course I now feel awful.

What do people tend to do locally? Do most students take loans or do most students get the fees paid by parents? The interest is astronomical. I am SO taken aback that our young people don't get an interest free loan.

One other question I have is can you pay the fees off in one go and early? We are also thinking that he could take the loan and in a few years when it would work for us a little better we could pay it off for him?

Any insight much appreciated.

[SWtastic]

I believe Martin Lewis aka Money Saving Expert, is doing a programme about this on ITV tonight so that would be worth watching.  Previously he has always said take the loan for fees but I don't know if that advice has now changed in view of the latest news.  You can always look on the moneysavingexpert.com website too.  

Go in with your eyes open re the maintenance loan too - it's means tested and parents are expected to top up whatever is awarded.  With accommodation alone £8-9k in some areas and food/living to go on top of that, this can be a nasty surprise for some parents who hadn't anticipated it when budgeting.

[blush]

I too was out recently when some friends asked how we were planning on helping with uni fees. I was the only one of 4 families that would need to get my daughter to take the fee loan and one of the husbands having supper with us was quite outspoken / almost rude in his declaration of how awful it would be for my daughter to leave saddled with debt when we all left debt free.

I too felt awful.

I do have friends who are taking a personal loan for the fees and the children are paying them - interest much lower than the rate charge by the loan company. Might be worth thinking about.

Don't feel bad, I am sure that most students take the loan it is just in more privileged areas that they don't.

[SWtastic]

You're right Blush, most students do take the loan/s.  I know of some whose parents/grandparents cover the maintenance loan part but most students I know (and I've got two in Y1 and Y2 at uni) all have the full fees and maintenance loans.

Some of my daughter's peers are into trading cryptocurrencies to cover their living expenses etc. but I think the old fashioned method of getting a part time job is better in terms of gaining experience of the world of work.

[henricook]

Meh, I think the people not having their kids take the loans are fools. It's a relatively cheap (in terms of APR) and very available loan facility and the money you'd spend on not having a loan could be working better for you in the mean time. Putting the money you'd spend on not having a loan aside, making it work for you at minimum until your child is done with uni or even indefinitely and telling them it'll all get paid off by you at a distant future date in their life is the more savvy financial move in my opinion. You'll make money where your friends didn't.

Using available debt facilities to a sensible %age of leverage (sensible being based on your situation) is a sign of good financial management.

 

[Nonappyhere]

hi

At university stage, I think you will find that different parents divvy up what needs to be financed in terms of your child being at university in different ways (I do it differently to a good friend). Few pay tuition fees. When in Rome..etc. You might also lose out if the govt policy changed for example.

For living at uni, if your household income is lower, you qualify for a living expenses loan aswell.
This is sent to the student each term, but is not usually enough to cover accommodation fee aswell as living needs.

So even those lower income families will need to sub their child, or else the student will have to get a job whilst at university

If your question is regarding only the *university tuition fees* for 3 or 4 years (assuming its not medicine which is longer) , the vast majority of students will use the loan system at the very least for the tuition fees. This has been set up by the student loans body, and tuition fees are paid automatically to the university termly. The student doesn't handle this money at all.

When the graduate gets a job, over a certain salary (check the gov site) they will start to have a small amount deducted to start the payback.

Its not like taking a private loan imo its your right to go to university and the arrangement is to pay back the means afterwards.There is a cap on the payback amount, coordinated by the Student loan body, as the person needs income to become independent of parents.
After 30 years, the loan gets written off if there's any left to pay.
This system in my view is not something to give feeling of shame or anything, its a practical inclusive measure. It will not affect your credit rating.


Since there is so much else to pay for (rental, food etc transport etc ) I see little reason to pay the tuition fees aswell, unless you are awash with money. And not even then.
I also think its more useful for the student to do some budgeting themselves, how you work this out is up to the parent and the student . There are better things to do with 28K fees odd for a 3y course, as you will presumably also paying 3 years of accommodation and 3 years of food/transport/holidays/mobile phones etc etc
I don't know if this helps at all.

[Nonappyhere]

ps the idea it being they 'saddled with debt' is a very old-fashioned ill informed view in a bubble. just not practical.

At university you will find bright motivated students from all backgrounds who haven't been to private schools or had coaching or private lessons of any sort, it doesn't hold you back in life.

[betsyboop]

Lots of variable ...
and it depends if the children will go into a high earning career post uni or not as that will influence how much they will repay and the costs altogether
It also clearly depends on how much faith you have in the government not to change the rules (again) once they need money in. 

[ronangel]

Let them take the loan.A future government may cancel it and pay all expenses to get your vote.
Interest rate will be much lower than anywhere else,and you can always pay it off later if need be!

[Just_T]

There's also the psychological aspect of hoping/assuming they will take their education a little more seriously if they have to pay for it themselves (even if you 'help them' pay it back at the end so they are not overly burdened). I always thought I'd tell mine that I will pay for tuition etc., but your spending money is on you (so that they might moderate that spending based on how much they had saved/earned in the summer). But then again I worked in the summers from age 15 (and babysat long before then)....it was a different time!

[SouthLondonDaddy]

Student loans are not really loans, they are a graduate tax which you only pay if you are employed and earning above a certain threshold.
Martin Lewis explains it well: https://www.moneysavingexpert.com/stude ... s-changes/

If you are absolutely loaded and your child is likely to end up in a well-paying career (e.g. not nursing or teaching) then, sure, pay the fees upfront. In every other scenario, it really depends. Eg if the child takes the loan, there will be more money available to pay for living costs or to pay for other stuff, from a house deposit to further education to help setting up a business etc.