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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

AIBU to wonder why the UK doesn't have a culture of saving for kids' University?

323 replies

windygallows · 05/07/2016 21:15

I'm originally from North America where 'saving for College/University' is a big part of the culture, in fact it's quite normal for parents to take a college fund out just after baby is born. And understandably - University is really expensive in the US eg (tuition + living expenses of $30,000 pa).

I've had both my children in the UK (have lived here for 20 years) and do my best to put a bit of money into a college fund every month, even if its a stretch. When I mentioned this to a few friends they looked at me with amusement and asked 'why?' I've casually asked around if others are saving for college - some have put money aside but haven't specifically said it's for higher education. I haven't pried, just asked a few people so don't have a full picture.

However I'm finding it surprising that this isn't more of a concern for parents. In the UK University isn't 'free' anymore (eg. through grants), tuition is very pricey now, grants are rarely available, and student loans are shrinking. But it just seems like this hasn't been absorbed by many parents. Or maybe it has and I just don't know!

Before flaming me - I'm aware not everyone can afford to put money/savings away and I'm also aware that not everyone can or wants to go to University, so no need to debate that. I'm just questioning the seeming obliviousness to the dramatic change in the cost of University here.

AIBU?

OP posts:
SchnitzelVonKrumm · 05/07/2016 22:39

A friend of mine started paying into a school fees scheme for his future children as soon as we left university. He's just had his first child, aged 45, so the fund must be worth a bloody fortune. That was for public school (he is v posh) but I assume people who can afford it and who assume their child will go to university (my parents wouldn't have done) will start doing the same for their children's university fees.

NowWhat1983 · 05/07/2016 22:40

Here if you're very academically strong you hope you can get into a good programme but beyond that there is no reward or incentive, IYSWIM.

That is also an American thing.

Here if you want something enough you bloody work for it, HARD, yourself.

Perhaps we dont need to rewarded for going after what we want. The only incentive if wanting what we want.

if US teenagers need an incentive well....I dont know what to say. If they want it that bad they'll do the work and pay.

titchy · 05/07/2016 22:41

Fees will never work like that in the UK for various reasons I've posted about on other threads - 65% of SLC loans are a government balance sheet credit, not debt. The current system saves the government billions and billions. It works for them, if not the graduate.

The current government also has a clear agenda on access to all which means fees are regulated. The US doesn't as far as I know.

Finally, scholarships. The amount of money that US universities have in endowments compared to the UK is phenomenal. There is NO culture of giving to your alma mater. Most universities here have virtually nothing in endowment income - so very little in the way of scholarships.

windygallows · 05/07/2016 22:41

NowWhat - scholarships can cover a range of expenses, not just tuition. It's just money given to support students in attending University. So even though University tuition has been free until recently there are still costs for accommodation etc and living fees which aren't cheap. I'm just surprised there hasn't been more development in the world of scholarships. Even now they are growing but minimally.

OP posts:
littledrummergirl · 05/07/2016 22:41

Ds1 wants to be a vet. Five years at £9000 tuition fee plus he will need to take out loans for maintenance. His debt on leaving uni is likely to be equal to my mortgage.

I would love to save this much money in less time than I've been paying my mortgageHmm
Given that our household earns just over minimum wage, has nothing left at the end of each month and is unlikely to see any change in circumstances, putting money by is not as high a priority as -hmm let me think- feeding our dc!

Ds1 knows we can't offer financial help and is prepared for the debt he will rack up. If he was doing a degree for the sake of it though I would be advising another route.

He will be an awesome vet though if he overcomes his obstacles.

BigWLittleJ · 05/07/2016 22:42

However been putting money into trust funds for our boys since they were born. If they choose to go to uni they can use the money to pay for it, but if not, they can use it as a house deposit, for travelling, whatever they want. Hopefully we will have raised them to be sensible enough to make responsible decisions.

BarmySmarmy · 05/07/2016 22:42

Saved for DC since birth but I am wondering whether it is actually best to spend it on Uni, or to use the loan and spend the savings on a deposit for a flat.

Will wait to see if we even have any research Unis in 4 years time....

BigWLittleJ · 05/07/2016 22:43

*we have, not however

yougotitdude · 05/07/2016 22:44

I dont know how it works in the states but here you get loans that cover your tuition fees plus a loan for living expenses (which is actually based on your parents income unless you have been non financially dependent on them for I think 3 yrs in which case its based on your own)

I dont get this whole saving up for kids university when there is loans there and many students manage to hold down a PT job as well but I imagine it isnt easy when doing courses like nursing etc although at the moment you can get an NHS bursary which doesnt have to be paid back- they are scraping this though and it might have already been done.

I didnt go to university and not interested in ever going- if I want to do a degree I will do one with the Open Uni alongside working.

What happens if you put all this money into a special college trust and then your children decide not to go?

NatalieRushman · 05/07/2016 22:44

I'm in Scotland. Tuition is free, and there are people at uni who get enough loans and grants to live off them alone. If your dc are only eligible for the minimum loan, then your income is probably high enough to support them without having to specifically save for them.

Also, student loans are nothing compared to the loans in the states. The interest is only equal to inflation, and you don't have to pay it back til you earn a certain amount, so you only pay back what you can afford to pay back.

AgentProvocateur · 05/07/2016 22:47

Nowwhat1983, in answer to your question (can't get c&p to work Angry), because I can. That's government money that could be better spent on something other than enabling my child to fanny about in a hobby for four years.

madein1995 · 05/07/2016 22:48

I went in Wales so reduced fees. Loans and grants are means tested which worked well for me as parents own house, only child etc so although low income could afford to help out. Loan/Grant paid accommodation, and gave me a bit of spare money, parents have me £50 a week and I paid everything myself. I think most parents instead of having a fund bung the dc a bit of money every week.

NowWhat1983 · 05/07/2016 22:50

Fair enough AgentP.

My sibling did exactly that.

Actually got kicked out in year 2 and has never had to repay their loans as they dont earn enough to.

They just pissed govt money up the wall for nearly 2 years come to think of it.

MilkChicUK · 05/07/2016 22:58

Fees aren't an issue as many people have already said - the cheapest way to cover them is to use the student loan as you may end up paying back considerably less in the long term. The only way we would manage to save at the moment would be to not pay our mortgage! In terms of living costs, most students have both part time term time and holiday jobs which do fund basic living expenses over and above fees. I think part of the UK university experience is the scrimping and saving (snakebite and black and 2 straws etc...) and actually learning to budget and creatively live within your means. I'd rather be a crisis fund while they're students and help with the big purchases when they really need help. It sounds harsh but the way things are financially right now, I think that if our kids get used to having more money than they absolutely need, they'll never manage to save for a home of their own or pay a mortgage.

ZaZathecat · 05/07/2016 23:01

I think it is because we view university as something anyone can aspire to as it is funded by the student using the loans available. If we had to save up for it only better off parents could afford for their dc to go to uni.

Tartsamazeballs · 05/07/2016 23:04

Because American student loans aren't like UK ones, they're more like normal loans. English ones are more like a tax in that they can only ask for a certain amount and that's over a minimum threshold. I'm not sure if unpaid loans are still written off after a certain timeframe as well? They're not really a loan in the typical sense.

I'm putting money into a pension for my kid. Whatever shit decisions they make during their life, at least they'll have a comfortable old age.

greenfolder · 05/07/2016 23:07

Dd1 was born in 1995. I started saving a bit. Then a bit more. Then 2years before she was due to go, fees trebled to 9000 a year. We have 3 children so it was too late. So she and the younger ones will take loans. The money we saved we will hang on to to help them out in different ways when they are older. Oldest graduated this year with a 2.1 having worked on and off during her studies.

confuugled1 · 05/07/2016 23:08

I think also that the way things have been going over the last few years, whereas you used to only need a single wage for a mortgage and living expenses, these days most people need two wages to cover a mortgage or rent and every day living expenses. There isn't an extra wage coming in that in the past would have been used for holidays, savings, contributions to education (although obviously due to grants there would have been much less need for it too) and so on.

House prices and rents have risen massively in relation to wages, as have so many other things that you need to get on a regular basis - food, fuel and so on. There are a few things that are relatively cheaper but they tend to be infrequent purchases (TV, computer, clothes) so that's great but no good for savings.

For example - I know different people that do the same job (think lawyer/doctor/engineer/professional) that are in their late 70s, early 50s and mid 20s. All of them have (or are aiming to for the youngest!) bought their first property in their mid to late 20s, all couples, all working in the same profession.

If all things were equal then you'd think that they should each be able to buy the same sort of house in the same sort of place at the same point of their careers - logical if house prices/rents had kept on an even keel with wages. However - eldest were able to buy a 3 bed house in what is now a very nice part of London. Although it was a bit of a stretch, they were able to buy it with their combined salaries and the rest of the area had similar young professionals living there. That house would probably be worth at least £1.5 million plus now - so would be selling to a completely different demographic.
Middle couple were able to buy a one bed flat in a much less nice area of London - those flats are now probably going for about half a million pounds now.

Youngest couple - whilst their combined income should enable them to look for a mortgage that's maybe £2-300K - still pretty good but it's going to get them a lot less than the same job would have done 25 or 50 years ago.

On top of that commuting or travelling costs are much higher, food costs are higher even if you have down-branded (or whatever the term is!) and now shop at Aldi instead of Waitrose or Tescos. Bills are higher, VATs more than it used to be. And wages just aren't going up. People are working much longer hours - for many it's expected that you'll get there early, work through your lunch hour, stay on later until the job's done, all for no extra pay.

Dsis used to work in a department of over 20 people - when one person left, they didn't take on a replacement but juggled their jobs between everyone else and it was relatively easy to absorb it without too much problem. Others left over time - never replace, and always the work was shared between those remaining 'because it's just one person's work'. Except by the time that there were only 8 of them left in the department they were still needing to do all the jobs they were doing before so they were all doing the work of more than two people, having to put in crazy hours just to keep on an even keel and it was a nightmare in busy times as there was no give in the system. If 13 people had left all at once, there's no way that they would have contemplated giving all the work to those 8 people left behind -but because of the way it happened the employer was able to cut their costs massively, while having a major detrimental effect on the remaining employees quality of life.

Add to that the need to save for necessities like pensions (the country is going to get hit badly soon as Gen X hits pension age as a much higher percentage than previously just haven't had the money to save for pensions so not only will they be spending less and putting less into the economy, they'll be relying more on benefits too), money for repairs and taxes, as well as nice to haves like holidays... The way the system is set up there isn't any slack in it to save much for education.

The governments have done their sums and spotted that there was a bit of slack so assumed that they could charge for education and the money would be there for the saving and thus the taking. But as other prices have risen and others have also had their eye on that bit of spare that people had - well they've all decided they would take their share of it resulting it there being even less than there was previously.

Sorry, it's late and I'm tired so that's not a very good description but hopefully it sort of makes sense!

nagynolonger · 05/07/2016 23:11

It is the increase from £3,000 to £9,000 per year that has dropped us right in it.........Thanks for that Mr Clegg.

Our eldest two DC went to university in the late 90s. One paid the loan off this year and the other will pay it off in 2 or 3 years hopefully. That was doable with some help with living expenses from us.

We will have two at university again in September. We will do all we can to help but they are going to have massive debts.

Why don't parents save? I'm sure those with spare cash do. Many can't and we weren't given much notice of increased fees to be fair.

ZaZathecat · 05/07/2016 23:11

Also, any money I can save for my dc is better used helping them towards a deposit for a home - there are no cheap loans for that.

BabyGanoush · 05/07/2016 23:14

OP, it's a debt based society, as you can see from the replies.

It is a cultural difference with US or Germany.

AprilShowers16 · 05/07/2016 23:14

I think there are plenty of parents saving for their children (if they can) but with the way students loans are set up (repayments tied to earnings and written off after 25-30 years) it really doesn't make financial sense for parents to give savings to children to pay off their loans/pay their fees. Their saved money would be much more wisely spent given to their children to help with a house deposit (which I know many parents who have done).

Fomalhaut · 05/07/2016 23:16

Most of the reasons have been covered above:

Fees are recent - I graduated in 2000 and had none - very small loan, tiny grant
Interest rates are low and that combined with the way loans are paid back depending on earnings means it's not always efficient to pay in advance.

One thing that's not been covered above is the difference in disposable incomes. My colleagues in the USA take home much, much more money than I do due to different state/country income tax levels. That extra is save able. The U.K. Is a low wage high cost of living country - lots of people just don't have the extra to save.
Those who can and do save know that the big thing here is property. You're much, much better off giving those savings as a deposit on a house and letting them fund most of uni themselves with just a top up for living expenses from you if you've got the money.

suit2845321oie · 05/07/2016 23:19

I went to uni when there were no fees but I wasn't eligible for a grant so my parents supported me until I graduated, I didn't take any loans at all. We won't pay fees for ours but we will fund their living expenses and won't expect them to fund themselves. We don't have a college fund but don't anticipate it being a problem or we will take some money from the house if interest rates make it affordable to do so. We see it as our role to support our children through undergrad degree and that they're not expected to support themselves until after that

dogdrifts · 05/07/2016 23:22

I have been asking myself this question for the last few years, as we are in the same situation in reverse - now living in North America with 3 kids in high school and not having a penny saved for uni on arrival in the country. Likewise for pensions. It is astounding how countries can have such different cultural attitudes to lifetime finances. And it is astounding that I am so far behind in saving.