To let my DCs spend their university money on something else

[flashheartscanoe]

A while ago I inherited some money from my grandmother. At the time we decided to invest it for the kids so we could contribute towards their university costs when the time came. We don't have a big income so it would be a struggle otherwise. Its not enough to pay for it all and they will need loans and jobs as well. Roll on a few years and the eldest is talking about uni and potentially doing a long and expensive course. It's time to talk to them about it - I don't want her to feel she didnt have the same choices as the others so we need to be clear from the start. So here's the question...if you part fund a long course for the eldest would you let the others have the same amount to potentially do something else with?

[flashheartscanoe]

Thus has really clarified things for me, thank you to everyone who has replied. I have to admit my integral calculus is a bit rusty!

For now I will make it clear that we will contribute a bit for uni but a similar amount would be available if they chose to do something else.
I'm going to hold back the bulk of it and revisit at a later date. I would love to help them with a deposit but I like the idea of releasing it anyway if they haven't gone that route by a certain age.

[HairyMuffandProud]

Op there you go, you have already lived this yourself.

Yes MSE always bangs on about looking on the loan in a different way.

Without a doubt, spit it equally for them, even though you may see uni - in whatever help you provide as a worthier option.

Split it but make sure both lots of money goes to something tangible like deposit for house, which as people say is the killer right now and main issue facing our young.

[Bolograph]

My and DP are currently saving for a house deposit, and by not having any debt we are going to be able to get a significantly better mortgage rent than we would otherwise.

Alternatively, you could be paying 9% of your income over the threshold while your parents give you the deposit and you immediately buy a house, rather than renting, which is (I would guess) a larger outgoing than 9% of your income over the threshold.

Comparing these two scenarios is not remotely easy, and a lot depends on the extent to which you regard "being debt free" (even though this being the only sort of debt in existence whose repayments are almost entirely decoupled from the capital sum) as being a moral good worth spending money on.

I modelled various scenarios for my children, and there are very few (most of them about rapidly being high earners) in which early repayment or not taking the loans in the first place is preferable to having the capital sum. If your parents are rich enough to pay the fees and living costs from income, or are rich enough that they can pay the fees and loans from capital without significantly impacting their ability to later give you more, then the situation is different: the rich are different to us, and all that.

My modelling of course depends on the sets of assumptions I used and a couple of bits of integral calculus on which I was a bit shaky and had to use Wolfram Alpha to cover my blushes but I'd be surprised if the basis that people are arguing differently is any better supported than my decisions.

[whois]

£50k each - for uni, house deposit or other education/training or entrepreurial activity age under 30. Or you get it no strings attached at 30.

[witsender]

Split it in thirds, she wants to spend her section on uni then great, if the others want house deposits then great.

[Marmitelover55]

In order to get round the 7 year thing (which hopefully wouldn't be an issue anyway), you can, as beneficiaries of your grandmother's will, write a deed of variation to her will leaving the money to your children rather than yourself. I think you have to do this within 2 years of her death though.

[ChickyDuck]

*mortgage rate

[ChickyDuck]

I'm going to disagree with a lot of the posters so far.

My parents paid outright for my uni fees and rent, and I so incredibly greatful to them for it. It means that now I am in my twenties and I do not have £1 of debt to my name. My and DP are currently saving for a house deposit, and by not having any debt we are going to be able to get a significantly better mortgage rent than we would otherwise.

In terms of dividing the money: Offer your kids the same opportunities, remembering that might not cost the same anount of money. My brother went to uni after the fees increase, and my parents did the same for him. In no way do I begrudge that extra £18 grand they spent on him. We are both incredibly privileged and will be equally set up to succeed in our twenties.

[Beepbopboop]

My uni degree cost me over £50000. Not including interest.
I would say let them use it as a deposit for a house and get a student loan.
A 4 or 5 year course could easily cost £80000.

[Bolograph]

So yes, there's a 7yr death implication

Only If the parent's total estate is worth more than £650k. I may be doing them a disservice, but this doesn't read like a financial debate from a family whose estate would be worth £650k.

Personally, I'd simply be saying that there's £50k in the bank growing for you which you can access when you are 30

So, you worry about the very small risk of both parents dying within seven years, but not the rather larger problems about having money sat in the parents' name when the "children" are 30, and hoping that in the meantime no-one requires benefits, get divorced or otherwise has a life event in which capital is involved? Setting up trusts is expensive, and trusts in which the remainderman is the sole beneficiary can be dissolved at 18 by the beneficiary anyway.

[Kleinzeit]

I am just trying to be careful here as there was some money available to me and my siblings and is caused an awful problem when my parents 'approved' of what I wanted it for and didn't approve my brother's plan.

That's why I suggested an age point where you would hand the money over with no strings. Whether that is 21 or 30 is up to you but hanging on to the money forever until they use it for things you approve of can come across as very controlling. It can also come across as very arbitrary and it can stop your children from standing on their own two feet because Mum and Dad might hand them money or they might not.

There should be some age point when you decide that OK, they are old enough to make their own decisions and at that point, if they piss it up the wall that is their mistake to make.

[TreadSoftlyOnMyDreams]

www.saga.co.uk/magazine/money/personal-finance/giving/tax-and-gifting-money-to-children#

£3k is the limit per annum across all your children according to this. So yes, there's a 7yr death implication but with multiple children and multiple £50k's then a decent tax advisor might be a good bet for the OP.

My DH left Uni at a time when it was free fees with massive loans. He took out the max available to him and literally p*ssed it away. His parents also paid for his accommodation during this time.....His contact hours were 10 hrs per week, and dropped over the 3 yrs. He freely admits that he could have held down a full time job during this period with a flexible employer.

Student loans weren't available [commercial personal loans only with a guarantor] where I grew up and my parents couldn't fund uni fees/living accommodation though were happy for me to live at home and commute to uni. I left uni with zero debt having worked my way through uni to fund fees and later accommodation costs also.

Personally, I'd simply be saying that there's £50k in the bank growing for you which you can access when you are 30. With the changing interest rates and t's and c's for student loans its difficult to say what's the best way to play it, but I'd certainly be motivated about leaving uni with the minimum amount of debt possible if I thought I'd have to use my mortgage fund to pay them off instead.

[flashheartscanoe]

Thank you, this is all really helpful. I was interested that so many said not to fund uni and I went away and did some research. Money saving expert has a brilliant guide. He recommends and it makes sense to me now to let them take all the loans. That way they are truly 'invested in their course'. I still think we may top it up a bit - it seems that the average yearly rent is about 5 grand and the max living loan is around 7.

I think I would still give a non-uni going sibling a similar amount as long as he or she had a clear plan for it. I do think it would be unfair to pay the rent for a uni student and not someone who decided to do something else (a low paid training for example).

It seems that the money is better spent later on - I am just trying to be careful here as there was some money available to me and my siblings and is caused an awful problem when my parents 'approved' of what I wanted it for and didn't approve my brother's plan. We always agreed that parents shouldn't control money but I feel differently now I have kids!

[Bolograph]

£50k if that's the number can't be gifted in one go without tax implications

Could you clarify this? Unless the OP and the OP's husband both die within seven years, what implications are you thinking of?

[PinguForPresident]

I'd use it to pay their rent while they're at Uni. Loans for course fees is a given these days, it won't hurt them to pay back their loans once they graduate. And then there'd be plenty left over to give them to use as a house deposit (and ONLY that!) when they want to buy somewhere.

[TreadSoftlyOnMyDreams]

Take capital amount, divide by number of children.
Advise them that it can be drawn down against university costs, or a mortgage, otherwise they won't get it until they are 30. 21 is too young imo.

£50k if that's the number can't be gifted in one go without tax implications so you should consult an advisor as to how best to manage it via trust or whatever.

[Cherylene]

When loans were brought in, I saved some money for each DC. Then they brought in the tuition fees, and I thought oh well, it will cover that, then they put them up, then tripled them, etc. So 6 1/2 K was pissing in the wind by then .

So they took out the full loans, and had the money to help things along and as a cushion for loans that turn up late, pay for extras, year abroad, travel etc.

The trouble is, you can take all the loans out and then not get the 1st or 2.1 (and it is perfectly normal not to) and not get onto these graduate programmes where you earn enough to pay it off. So you bump along the bottom until you finally earn enough to get off the ground, then you have to pay 9% of it to the loans company.

Unfortunately, the govt is trying to change it so that the £21,000 threshold is not increased with cost of living, so that students will have to pay it back earlier and earlier. This was not in the small print.

It is probably best to look at other options, or work for a while, then go to uni as a mature student when you know what you want to do. Unless you have a clear career path ahead of you.

[bojorojo]

I agree. Treat them equally. If they go to university, take out the loans.

We are holding money for our DDs but they will get it when they need it. That is not 21. Older one is not starting paid work until 24 due to post grad courses. Younger one is only doing 3 year degree. Years ago no-one used an inheritance for university. It was always used for housing, travel, a car etc. Obviously fees were not payable but we prefer to stick to the system in use for most students, loans, and use the money we have for more important things. That way, educational choices, intelligence and job prospects are out of the equation. They will get the same - and who can argue about that?

[PenelopePitstops]

Don't give it them for uni, it will be far more useful as a house deposit. £50k is loads!

[junebirthdaygirl]

I wouldn't tell them about it or give them money at 21. Use it as sparingly as you can to subsidise them in college eg paying rent. Keep a rough record of it so feel pretty equal. Then later you can decide on the rest. I understand it was left to you not them so not being dishonest not telling them. None of my three would have known how to cope with a sudden 50000 at 21. They learn so much and mature so much from making money last and working in horrible old jobs to get through. Its all part of life and their confidence and self esteem grows through managing all that. I wouldn't have a problem paying an extra year or two if one chooses a longer course. Different if one chooses not to go at all. We told ours we would help them get a degree.We pay rent and fees. One was four others were three. Completely no issue. They all work part-time for living expenses. No real loan system here in lreland. They benefit from roughing it a bit and not being different from friends.

[Bolograph]

With course fees of £9k a year (and quite likely to rise), and then living expenses to find on top, you could easily eat through £50k on a four year course.

The all-up cost of a university education in the UK, if you are living away in reasonable accommodation to a standard middle-class parents would deem appropriate, is about £18k per annum, more if you are in London or other hotspots for cost (paradoxically not Oxbridge, as most students live in college accommodation which is in relative terms reasonably priced). This includes travel, books, clothes, food, entertainment. It can be done for less, but doing so when you can afford not to strikes me as pointless. Therefore, the budget for a three year degree if you wanted to do it entirely from your own resources is of the order of fifty-five thousand pounds, proportionately more for a four year course. You may or may not be able to work while studying (Oxford and Cambridge forbid it, medics rarely have the time) and you may or may not be able to work in the holidays.

[shovetheholly]

Oh, and I would absolutely, definitely divide it equally.

[shovetheholly]

With course fees of £9k a year (and quite likely to rise), and then living expenses to find on top, you could easily eat through £50k on a four year course.

Personally, I would let them make their own decisions until their mid 20s as if they are going to pay the consequences themselves (i.e. don't tell them about the money). Then, once they have learned to struggle/be responsible with money - I seriously believe this is good for kids up to a point- you can swoop in and help out at a moment when they are more aware of the value of the cash.

[DistanceCall]

Whatever you do, just make sure all of your children receive roughly the same amount. It's awful when one or several siblings are treated differently from the others. So, so unfair.