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Parents funding all uni fees(133 Posts)
Can those of you who have funded/intend to fund your DCs through uni, so they don't need to take out loans, tell me if you have any regrets in this decision? What's the range of total annual costs (cheapest to most expensive) for students - tuition fees/accommodation and maintenance for different unis? How did you manage this financially?
I have friends telling me I'm stupid even to think about this and that DCs should take out student loans which they'll 'never have to pay back' - but given our DCs presumably aspire to earnings above the limit to pay back loans, surely many of them will be paying back loans for many years to come?
I'd rather my DCs leave uni debt free but this will have a significant impact on my own life and my future finances too. A price worth paying - or an unnecessary burden?
Personally I’d help in other ways.
For example: If you have enough disposable to pay full fees and tuition etc then you might be better off helping them to buy a property in their university city. If they get a 3 bed property they can rent the other rooms out and be sure of decent accommodation. You’ll have the rents to assist in the mortgage and can sell on at the end.
It also depends on how old they are, the age gap, what they want to study and where. How much time you have to save etc. I don’t think just paying for tuition and fees etc is the best use of that money. Use it by all means but a house deposit or the above buy to let scheme may be far more efficient
If it is going to have a significant effect on your finances and future then you’d be mad to consider it.
We have two DC at university at the moment and we pay their rent. They have a loan for fees and a loan for living expenses. Our earnings are too high for them to get anything but the minimum.
I expect DD1 to pay off her loan. Her course is 5 years so it’s substantial. DD2 is likely to have lower earnings and I’d be surprised if she’ll pay her 3 year course off. If they need any financial help to buy a house and we are in a position to help them then we will. But no I wouldn’t pay their student loans.
Quite frankly I wouldn’t encourage my children to take out loans with no intention of paying them back. If they are happy with a badly paid job, while shortsighted and disappointing, it’s their business. But taking money from the taxpayer for no apparent reason with no intention of making good by paying it back/actually earning enough to cover in tax payments the cost of use of public services is rather immoral. I would feel obliged to pay myself to make up for raising such selfish and entitled children. Hopefully it will never come to pass though.
Think of your DC taking out student loans as more of a graduate tax than taking on debt. It doesn’t affect your credit rating like other debt and they’ll only pay it back if they’re working, in proportion with their salary. If you’re even considering this then make sure you’ve factored in their living costs. If your aim is for them to have no student loans whatsoever (so no fee or maintenance loan) then you’ll need to cover all of their expenses. These will vary depending on where they go but can be madly expensive, especially if you end up having to cover rent/bills in London. I’d only consider it if you were 110% certain you could afford it for all your children (if you have more than 1) and it would have no impact on the rest of the family. But personally I think the money would be better used as a deposit for a house when they’re older. Although if you can afford to give them this too then by all means go for it.
Also, in case this is helpful, I started university in 2007 (when fees were a lot less) but my parents negotiated a 10% fee discount for paying everything up front so if you do go ahead this could be worth asking about.
Just realised I didn’t answer your question about how much it would cost. For our DDs it would cost around £18k each per year. They are in relatively inexpensive cities and both live quite frugally and top up their income with some part time work. So it would cost us £144k after tax income. No, that would not be possible.
Absolutely NOT a price worth paying. If you are well off and have the money spare then worth considering. Otherwise just no. Too many uncertainties over the next 30 odd years which is the length of time you'd need to consider this over.
This is very helpful. It's a bit of a tricky one for me. All their cousins have left/will be leaving uni totally debt free (and also with deposits for property in hand too). We are very much the 'poor relations' but I've done all I can to ensure that my DCs don't miss out whenever I can manage it.
Using savings (meant to top up the tiny pension I'll get one day) and working flat out, I think I can just about manage to fund them (DTs going to uni at the same time next year), although couldn't pay all fees/costs up front. I'd hate them to carry debt and have never been in debt myself except for a mortgage (I've never even had a credit card). So I'm averse to them beginning adult life in debt, especially as their cousins will be in a much more favourable position.
Both will study arts/humanities at uni and neither has any idea what to do post-uni but aspire high. They'll probably avoid London unis mostly because of the potential expense of living there.
I'm caught between continuing to put my all into supporting them, as I've always done and looking towards my own future if/when I can no longer work, as I have a tiny pension.
Anyone actually funded everything for their DCs through uni and now has regrets and if so, why?
And sorry re finances I’d break it down like this:
Fees - £9250 per year (average for a Russel group)
Accommodation - this can vary so much but in London you’d be taking around £6000 per year for halls but that will include bills. When they go into private rented (if not Oxbridge) from 2nd year onwards it’s a case of how long is a piece of string depending on where they are but bills will have to be paid too.
Living costs - course materials/money for food socialising etc. £10 per day (if you think this is reasonable, I don’t really know) would work out to £3650 per year
So that would be £18,900 for year one, with costs likely to rise in year 2 if they move into private rented.
Your sound like a great parent though OP, your DTs are lucky to have you!
Have a look at money saving expert.
If you have a tiny pension, offer kids some support with rent etc. My DC maintenance loan does not even cover rent.
Especially if they are doing arts/humanities! While of course it doesn’t mean they won’t get high paying jobs these are not courses that automatically lead into a career like say, civil or chemical engineering, or finance. What do they want to do career wise?
It’s not about what their cousins do, it’s about what you can afford. See it as a graduate tax. Especially sending two at once. You’re looking at a huge amount of money. If you can help them with a house deposit when they graduate that could be a much wiser move. If they are going to the same city and would live together then a property they can either use alone or rent rooms to friends would be a good use of resources.
We pay both our DC's fees etc
We don't want them to have loans. The terms are pretty shit. I wouldn't borrow money on those terms.
That said, if we didn't have the cash to do it comfortably we'd get the kids to take out loans.
We're agonising over this too. Like you, we would be able to pay but at a stretch and are considering whether help with a house deposit would be more useful.
I am tired of hearing it touted as a graduate tax by the likes of Martin Lewis and apologists for the government and the investment banks who will ultimately profit. It is currently not a tax, it is a debt which accrues significant interest. The repayment schedule is currently similar to a tax but the terms and conditions allow for any change at all on the whim of any future government.
I do not want our DD to take on such a large debt (for that is still what it is) the terms of which can vary at any time in the future, or indeed retrospectively. I think the psychological burden of this for a generation of young people is immense. She may or may not earn a high salary in the future but it is worth a lot to us for her to start out in adult life free of the shackles of debt.
Another point we are considering is that avoiding loans and the subsequent repayments will be a gift from us that she alone will alone benefit from for the rest of her life. Providing money for a deposit may not, in the end, be as clear-cut. Given the high percentage of relationships that fail I do not want any portion of our hard-earned money to end up in an ex-partner's pocket if a property is divided.
This may sound pessimistic, but a friend's recent experience has opened my eyes to this possibility.
Sorry! I just noticed you wanted to hear from parents who've already paid the fees upfront.
I'd suggest that you don't pay, encourage them to take out fee and maintenance loans. It's not the end of the world for them and if they struggle financially you will be there to top them up.
It's not the be all and end all to leave uni with debt. I say this as an adult who is attending uni and taking as large a loan as I can and a DP who is paying off his loan.
If in the future they change the terms and conditions and make the loan unmanageable then you can step in and pay it, otherwise, you have a nest egg to help with your small pension and/or some financial help with their deposit for a house.
If you only have a small pension you are mad to do it. We have a high income and still didn’t do it and expect a very nice retirement. DD now has a flat courtesy of us for a huge deposit. She might pay off the loan in future. DD 2 doesn’t earn as much and may never pay much.
If DTs become teachers and do not earn that much, it’s hardly a dent in their income in comparison to what you will lose. If you have spare £20,000 each for 3 years, so £120,000 then you really should put it into a pension for yourself. Do you expect your high earning children to pay for your old age?
High earning grads in the humanities are rarer then science grads with a decent income. Look at the stats for their courses. If they don’t get a city job in London, provincial starting salaries are not stellar.
If you have girls (or indeed boys) and they become stay at home mums or dads, they won’t pay much back in that scenario.
I still have young children so not at the same point in my life but I read your post and thought I'd add my thoughts to see if they're helpful!
My dh parents didn't pay his fees but bought a property for him (very kind, west London) which he used throughout his uni years and rented out the other three bedrooms in the property to students, money went to his parents. He took out loans for the rest and worked throughout uni. This ended up being a great decision on their part as now (13 years after he finished uni) because of the house we are in a great position housing wise and have bought and sold property as we've moved around the country and made great money, this in turn means all his loans and debts are now paid off, granted his uni fees at that time were a lot less than they are now!
I'm funding mine through uni, but they'll all be getting a loan for tuition fees. My daughter studies at Warwick, and I have bought a property for her to live in, and 2 other people live there. The rent goes into her account. I will do the same for the other 3.
We paid living cost, not tuition fees.
Bubbles is right.
We considered it very carefully but decided to let them take the loans. We will re-consider when they graduate and we know what career they find. Two doing STEM subjects so potential high earners but you never know. One is leaning towards teaching and the other doesn't know.
The worst of both worlds is to let them take the tuition loan and not the maintenance one. The repayments are based on income not on the size of the loan. If you owe £20000, £50000 or £100000 the repayment deducted from your pay is exactly the same.
Only the very, very highest earners will ever fully repay their student loans. Your DD may decide to become a teacher or she may not work in a high paying job.
If you set the money aside you could always pay it off later. Admittedly there would be a cost in interest but you can't change your mind later and take the loan.
If you only have a small pension your first financial duty is to yourself. This will also have tax advantages. Only once you have enough to support yourself in retirement should you think about university tuition fees.
We pay rent and maintenance and our children have received a small amount from grandparents towards fees, a couple of thousand. They both work from time to time.
We might yet pay off some of the tuition fees but only when we know we ourselves are financially secure or will be in retirement.
It would be very annoying to pay off the debt and then have some kind of government change of policy!
How is it the worst of both worlds @FakeMews
I have no regrets at all about paying DD2's costs for uni education. It was tough especially as she had a breakdown and had to stay on for another year but I do think it was worth the money.
However she went to uni when Blair wanted all kids to go to uni and now I would probably encourage her to start her career at age 18 and not worry about a degree.
Because it is not a typical loan where you pay a set back each month.
The repayment they make depends on their income.
So whether they owe say £10k or £100k if their salary is £19,000 nil repayment. Salary £30k then they will repay a set amount I’m guesstimating here for the example, it would be say £75 repayment each month (remember doesn’t matter that the amount of debt outstanding is) and if they’re earning say £90,000pa then their repayment would be (again guessing) around £600 pm. Hope this helps.
Personal opinion here but I think the money is far better spent on helping with a deposit to by their first home. A student loan won’t affect your ability to get a mortgage (which is one of the reasons it’s often called a graduate tax as it doesn’t hang round your neck like a conventional debt) but the lack of a substantial deposit will. I have many friends in their 20s who managed to get on the property ladder using the generous bank of mum and dad along with a mortgage and the vast majority have student loans. Those that have bought with a partner have done so as tenants in common and declarations of trust to ensure the money remains theirs in the events of a split (as a PP mentioned this).
But to the OP, please don’t rinse your retirement savings to do this. You sound likely a lovely mum who wants to the best for her DC but if this will severely impact your ability to be comfortably off as you get older than you then I’d question whether or not it’s affordable for you. As PPs have suggested a compromise might be that they only take the fee loan.