DS has inheritance & could cover uni fees. Why should he still get a loan?

By comparison, 10 year mortgages are about 3-4% and Tesco offers personal loans for about 3%.

How many unemployed 18 year olds can access those sorts of rates, safe in the knowledge that if they're in low paid jobs they won't have to pay a penny.

Like the OP's son I thought computing was a well paid field so I did a computing degree and worked in computing for over a decade. Well paid jobs aren't as easy to come by as people think, and further training and certification is usually required to earn the big bucks. I'd recommend taking the loan and banking the cash then waiting to see what happens, rather than blindly assuming that computing graduates are well paid.

My DD has a highly paid job but is self employed. Parents can gift children money every year free from IH when they die. They can gift larger sums too, as we have done, as long as it’s 7 years before death. Hopefully that’s not an issue! There are all sorts of trusts that can be set up too.

We didn’t know DD would be successful in her chosen career, or even be able to pursue it, as its highly competitive. She wasn’t totally sure what she wanted to do when she took out the undergrad loan. It may well be better to start paying it off but we though we need a few years to look at it. In the meantime there’s £20,000 stamp duty to cough up!

As someone who is currently paying off a student loan I think he would be mad not to get one and leave his savings in an ISA! It's the cheapest loan he will ever have and he will barely notice it going out of his salary when he starts working. He can choose to pay it off early whenever he likes so I say he should get the loan.

I also hope the op is managing her DS's expectations and not encouraging him to believe that he will walk into a highly paid job on graduation.

This is a really interesting thread. Both my DC will be in a similar position due to money left them by childless relatives.
There's some really helpful advice on here, especially points made about not having to pay it back for a while if the first few years post uni are financially rocky.

I don’t understand the “if he is line to be a high earners pay now”. If he is a high earner at 25 he can pay the loan off if it makes sense, with much more knowledge about his prospects. The small amount of interest in the 8 years is a reasonable price for more market knowledge. Otherwise he is buying an option on his future at the price of liquidity on poor information.

keep the inheritance so he has a house deposit.

@Keneft

I thought its higher than the non-STEM graduates i was talking about above, but ok, don't know much about these fields.

Generally i get frustrated with mnetters who are expecting their children to walk into jobs from graduation. If he has capital to support him afterwards than he's incredibly lucky and it would be insane to blow it all on uni when he could take out a government loan instead.

You could do the half and half as we did. They borrow the fee but we funded living costs.
He has his £5k from rent as a starter. We have funded both of ours like this but paid the fees on a Masters. DS rent plus bills is £5k and he gets £50 /week in term time. He works in the holidays and also works through Unitemps when he can.
It may be better to keep the cash in case he wants to do a post grad.

The typical salary in computing is not “much higher”. Some salaries in computing (high end jobs in merchant banks, often taken by people with maths or physics degrees, then computer science from the upper end of the Russell Group), are). And even then a small minority. Your IT degree from a post-92? Not so much. Employable, yes. But hardly a road to riches beyond the dreams of avarice.

You are in an unusual scenario and it makes sense to do as you suggest.
Most people it wouldnt. My dd it didnt. But in your ds position it makes sense. The critical issue is potential earnings. If he is likely to be a high earner pay now! With dd she is likely to be a middle earner and if you take out a couple of years to have kids and factor in some years part time its unlikely a dent would be made in loan, so interest not worth worrying about.

Ah I just saw he was doing computing, where i think salaries are much higher, but still not 55,000! But like other posters said, still wouldn't bank on anything.

55k is the highest graduate starting salary I have seen in a large cohort of top quality STEM. It is the top centile, not typical at all.

Oh and from those I know who went to Oxbridge (now in mid-late twenties) - one is a paralegal, after a law conversion degree and many internships. I'm sure she doesn't get over 35,000. A couple now doing phds - so think 16,000 a year. A couple of freelance journalists - so think 25,000 a year, and that came after a year of internships.

No brainer for me too; take the loan, use savings for a house deposit.

. If you start on a salary of 55k, which is a typical graduate starting salary in London,
*
Jeanne* - you are JOKING right?!!!!!!!!!!!!!!!!

Honestly, no matter how high flying your son is, i wouldn't go by the assumption that he'll be earning 50,000 within 10 years of graduating. Even a friend who did an employable subject like economics at a top rated london uni, then did a masters, then spent a year work in a pub while applying to everything, and then couple years working abroad before coming back to a 35,000 job in London. That was the general trajectory that most followed.

And so many high paid jobs require masters and internships. Only 6% of undergraduates have actually found a job before they graduate. Don't expect him to walk out of undergrad into a job - its not the 70s. He will need extra capital after graduation unless he is extremely lucky.

It will be harder to get on the housing ladder than to pay off the loan, even on a top salary.

I did a degree that was supposed to lead to a high paying job, I did everything right but now I’m 34, never earned more that £23k/per year and I’m working part time now for £15k because of family commitments. Call centres are full of people with good degrees, just on my team we’ve got a law degree, business degree, PGCE in English and a sports science degree The only people I know from uni who are making good money are people who got in the right company at the right time to get promoted through the ranks or have started their own businesses and taken the risks that are involved with that.

I’m glad I didn’t pay my fees up front. Granted they were a lot less than under the current system but I’d be inclined to hold onto any cash for now as you never know how it will come in handy in future and what opportunities will come up that he may otherwise miss out on, are unpaid internships still a thing?

He can always make overpayments to the loan if it looks like he is going to be in the lucky position of earning enough to pay it back in future.
Don’t worry about him paying the extra 9% if he becomes a higher rate tax payer, I seriously doubt it would be crippling and he’ll have his lump sum available to pay it off at that point.

I know some people are firmly against debt of any kind and will tell you never to borrow money if you don’t have to, in my experience they’re people who’ve never had much money and don’t have much financial acumen, people who have money are usually happy to borrow money and pay interest to ensure they’ve got cash available if they need it.

One point which hasn’t been mentioned which is worth considering about the maintenance loan is that it is not uncommon for better off students to use the money available from the other source to live on and then make poor financial decisions that make them decide to take a maintenance loan out as well, which is obviously not what you had in mind. They may sound sensible now when at home with you, but a bit of freedom frequently goes to their heads once they leave and start enjoying student life (I work in HE).

"55k, which is a typical graduate starting salary in London"

HAHAHAHAHAHAHAHAHAH

He could take a loan for the uni fees, can't take a loan for a deposit.

They've now changed it and moved the threshold to 25,000, so you're only taxed on earnings above that. These days, it will prob take him a few years to get a salary to start paying back, and it will only be a hundred or so a month. And after 30 years, gets written off anyway. It really is more like a grad tax.

Tbh I think it would be crazy to spend that cash on uni when could take out this loan instead.

Also, in many fields having a postgrad degree has become quite important. I could never afford one (even with the new loan, I'd need living expenses) and I'm still facing obstacles because of that.

Because he will not get a lump sum like this again in a hurry. He could use it for a house deposit when he graduates.

Dd will also have money from an inheritance but she won’t be using it for uni fees/living expenses.