What will uni costs be now if child has savings? Thresholds and fees?

[SprungisSpringYaY]

I'm just wondering what people have worked out uni costs to be now if a child has savings over 20 grand?
Will they have to fund it themselves? I recall a figure of about 9 grand a year for rent..
And they have to pay fees on top?

Don’t use large savings for uni fees. A deposit for a house is far more useful.
DH was given £40k by his grandad to buy his first flat, we were able to sell that when we got married, and buy our house. If that £40k had gone on uni fees and maintenance instead of DH getting a loan we would not be in the house we’re in now. DH would be slightly better off each month but not anywhere near enough for us to have saved up for the house deposit.

OP you don't sound like you are familiar with the UK system.

I have a student loan that covered 5 years of study (Two years with a threshold of £21000 and 3 years worth with a threshold of £25000). The only thing I have to do with it is inform them of any change of address and open the statement they send each year everything else is done automatically. I earn £26000 and pay back around £70 a month taken straight from my wages. I don't give it any thought and just see it as a graduate tax, I'm at the start of my career (teacher) and wouldn't be earning as much if I hadn't gone to uni. Non covid times I probably spend more a month on cinema / theatre trips etc, it's a small price to pay.

Honestly you are looking at this wrongly, as Martin Lewis says it is more like a graduate tax. However big your student loan is you pay the same amount monthly based on income, deducted from wages. And most people will have it wiped eventually. If something happens that they can't work, they will not be pursued for the debt. It's nothing like the US student loans.

They'd be better to keep their savings for now, could go towards a house deposit eventually, or something else useful.

Don't let your DC use up savings for uni costs! A friend did this and hugely regrets it, a whole house deposit is gone to save £5 a month.
SFE works like a tax, its taken from the salary before you even see it and it doesn't matter to banks/mortgages when you apply. I have 80k SFE debt and pay back £9 a month, I'll never pay it back but it will be wiped out in 28 more years.

I think you'd be mad to use savings to pay for university fee's, when a loan system is in place, one where you don't even have to pay anything back if you don't earn enough.

My dad used his savings to pay my student fees upfront and it was a stupid decision. I felt so happy at the time and then realised noone I know even notices their student loan or has any awareness of how much they owe, half will have it written off. I'd have been on the property ladder 10 years earlier if he'd waited and given it as a house deposit.

It will be entirely up to them. But if you somehow manage to get together say 50k each and insist that if they want to go to uni they must spend it rather than taking a loan, you are limiting their options, not widening them.

Tuition fees are not means tested. Maintenance loans are and go on the resident households income

My eldest decided to go to uni last minute & late so missed out on applying for tuition fees and it was decided that tuition fees would be paid for by grandparent (which made sense as inheritance tax would have been paid on it) and self-funded everything else, also had lucrative work schooling other people's horses so could earn 2-3x min wage on that, plus had a part time early morning farm job before Uni for the holidays/first year. Probably the only student to save money while at Uni despite an expensive hobby, but not a drinker.

Do not use inheritance and savings to pay student tuition fees.

You need to watch Martin Lewis explain this to a bunch of year 12s and about future earning potential and paying it back. Ds is going to uni this September and even though he was very clued up he found this every reassuring to watch. Stop thinking of it as a debt and think of it as a graduate tax.

Just because you find it burdensome to defer every year does not mean other people do. You would be much better served using any massive savings to put down a house deposit for them. That will be the most difficult thing a graduate will need to save for.

As others have said tuition fees are £9250, a full loan is £9488, your income dictates whether he can borrow all of that maintenance loan, Ds gets £4422 and we have to fund the rest. You would be mad to sink £60k on his degree, what if he quits at the end of his second year? Or comes out and decides not take a graduate position? Or has an illness that means he can never work and you have dropped tens of thousands on his education?

House deposit for sure.

It is a really bad idea for your children to try and pay for university in cash. The “loans” are like no other loans they will ever have - no-one cares if they can’t pay them off and they won’t have to pay instalments if they can’t afford them.

DON’T DO IT!

@ChristinaYang10

Don’t use large savings for uni fees. A deposit for a house is far more useful. DH was given £40k by his grandad to buy his first flat, we were able to sell that when we got married, and buy our house. If that £40k had gone on uni fees and maintenance instead of DH getting a loan we would not be in the house we’re in now. DH would be slightly better off each month but not anywhere near enough for us to have saved up for the house deposit.

Totally agree with this. Any large savings lump will always be much better used as a house deposit than paying for student fees etc. Student loans are only paid back if you're earning over a certain amount and then only a very small amount is taken each month, it's like another tax. It's just taken automatically and you don't have to think or worry about it, it's not a burden like it was in the old days (when I was young :-D). Saving up for a house deposit will always be much harder than paying back student loans (as such a small amount is taken each month).

"I'd prefer my dc to either pay it all outright or not go.. Or take very small loans"

If it helps for some context:

Less than 5 years ago at uni I took the 9k loan for fees as well as a 4.5k maintenance loan per year. My parents helped me with the rent that was around 4k per year. I also had a 3k interest free overdraft which I paid back when I started work. I know quite a few people who had part time jobs at uni but I didn't need to.

In terms of my loan repayments, I borrowed approx 45k. My balance is now over 50k as the interest charges on my loan are more than the monthly payments.

This sounds scary but in reality it isn't. I pretty much see this loan as something I'm unlikely to pay back - I earn over 40k and my payments are about £60 per month taken directly from my salary before I see it.

The student loan has in no way effected my credit rating or ability to borrow money. Since leaving uni I have acquired a mortgage and a loan for refitting the kitchen and my large student loan has never been a problem. I am much better off having not paid uni fees upfront.

Personally I would take the loans, the repayments are minimal and the 50k+ it would cost would be better spent on a house deposit or invested elsewhere especially if your child is unlikely to receive any large sums of money in the future. I don't think it makes sense to spend inheritance on uni fees.

If you haven't paid it back after 30 years the loan is wiped, and if you don't earn above £27,295 you don't have to pay anything back.

If its decided not to pursue the degree option its worth looking at Apprenticeships. I don't know what your child wants to study but there are quite a few options out there now - MBDA offer ones in Engineering, Software or Business all which give you a qualification, some up to degree level. The Natwest apprenticeship scheme is also quite good. I'm sure there are plenty more.

@SprungisSpringYaY

Yes but as I said.. I personally find it a mental burden and having to find the info each year to defer. The fear of having to pay it back at various stages..

They might not feel that way though, and may well have preferred to have £60k as a lump sum for a house.

They will be far better getting the normal loan and using their money as a house deposit after uni.

Martin Lewis has written extensively on this and argues that it is FAR better to take the loans rather than use up savings

I don't entirely agree with him though, as having student loan affects how much you are allowed to borrow for a mortgage. So it's kind of swings and roundabouts.

DS has applied for the tuition fee loan but not the rest. Like a pp we will pay his accommodation and basic living costs and he can get a job for any extras.

Technically, it's how much your monthly repayment is that may affect a mortgage, not how big the debt is. There isn't a huge impact any way.

www.which.co.uk/news/2018/02/tuition-fees-reform-can-student-debt-stop-you-getting-a-mortgage/

My fees were 9250 a year and then my accommodation £114 a week in halls. However my halls were vile. Mice, bugs, freezing. My uni offered a much nicer one for £140 a week I wish I had taken.

Then I moved out into a student house and it was around £500 a month bills included. With student houses you also have to take into account the summer fees as many of them charge you ‘half price’ rent to keep the house yours whilst you’re not living there. I took full student loan and also worked around 20/25 hours a week.

You really need to read through the Martin Lewis stuff on uni costs again and work hard on not passing on your financial insecurities to your children. There is nothing wrong about taking the full loan available to them.

Depending on their prospects it may be worthwhile avoiding the loans. I certainly noticed when I stopped paying >£400 a month in repayments, and my take home on additional work improved by a good chunk. The repayments add 9% to your marginal rate, which when combined with other expenses can reduce take home pay to next to nothing or indeed a negative amount of losing other benefits.

If however you have average kids likely to do averagely well take the loans.

Please listen to the advice on this thread, and what Martin Lewis explains.
Change the words 'student loan' in your head, to 'graduate tax', as that is what it is.

If your dc have inherited / saved £20K, they should seriously NOT spend it on paying to go to University, they should invest it and use it for a deposit for their first flat or house when they are a bit older. Otherwise they will be like so many people, trapped in the circle of not being able to save as they are paying so much rent.

If they go on to be hedge fund managers or some other jobs that pays vast amounts, it might be that they pay it back but 90% of people never have to.
If they do a more "average" paying graduate job - say social work, teaching, nursing, HR, etc etc they will pay a small monthly amount once their salary gets over (about) £25 000. This will be VASTLY less than they would be paying in rent remember.
If they ever have time out of work - maternity leave, illness, unemployment, accident, etc - then the payments of the graduate tax stop. If they choose a lower paying career - they don't pay. If they are unable to get a higher paying job, they don't pay. If they choose to work part time later in life (perhaps as a parent) and salary drops below the threshold, once again, payments stop. If they decide to set up their own business and it takes 3 or 4 years to start making money - again, they don't pay the tax.

It really makes no sense whatsoever to pay fees when you are not a hugely wealthy family.

@SprungisSpringYaY

Yes but as I said.. I personally find it a mental burden and having to find the info each year to defer. The fear of having to pay it back at various stages..

I mean this gently... but you can't make that decision for them. If they have savings in their own name, you cannot dictate how they spend them. And just because you found the mental load of student loans a burden, does not mean your DC will.

I was left £10k by my grandfather. To pay a year of uni fees would have been a bad investment (as Im currently not earning enough to trigger repayments anyway ) compared to using it as a deposit to get on the housing market.

If the money isn't in your children's names and you wish to pay for their fees, crack on, but it may not be the best way to invest in their future, as pp have said - a lot of graduates don't ever fully repay their loans. And repayments are smaller than the amount you'd need to save monthly for a decent house deposit (very generally speaking - obviously there's is a lot to weigh up)

Your DC would get their fees paid by student loans (usually £9250 for a full time course now) and depending on your income might get the minimum maintenance loan. It doesn't really make a lot of sense to pay for it outright.

They'd be better to invest the £20,000 in an ISA and buy a house at a younger age.

My friend did what you suggest.

Dropped out. Lost the entirety of their inheritance to two years of fees

Such a waste.