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AIBU?

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Original poster

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

80 replies

SprungisSpringYaY · 08/04/2021 09:23

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?

OP posts:
Watsername · 08/04/2021 15:08

Martin Lewis says it's much better to take the student loans and parents support financially by providing a house deposit.

SwimBaby · 08/04/2021 15:19

Get all the loans you can, keep the savings, it would be much better for the savings to be used as a house deposit.

Ginfilledcats · 08/04/2021 15:25

Definitely don't use savings to pay for uni. It's not really viewed as a debt once you graduate, more like a graduate tax.

Much much better for your children to take the loans and you top up either of your own money or from their savings any short comings if the loans don't cover accommodation. And put their savings towards a house deposit!!

Original poster
SprungisSpringYaY · 08/04/2021 17:59

Some interesting advice thanks.

By the way if they wanted to pay off lump sums of their loan can they?

Later on.
What's the thresholds of payment?

Eg they earn 50 thousand.. What would they pay?

OP posts:
Original poster
SprungisSpringYaY · 08/04/2021 18:03

Asd 400 is a lot a month and as you say it really does not add up.

Maybe if I can grow this £ they could do both.. Save some money on fees, maybe half... And have money for house deposit etc..

OP posts:
Thisgirlcando · 08/04/2021 18:14

I pay £191 a month on £41k

Pottedpalm · 08/04/2021 18:28

@SprungisSpringYaY

Some interesting advice thanks.

By the way if they wanted to pay off lump sums of their loan can they?

Later on.
What's the thresholds of payment?

Eg they earn 50 thousand.. What would they pay?

Yes it can be cleared when you like. DS decided to clear the remainder of his when he went to work abroad. DD finished paying hers off last year. It seemed that the payments didn’t stop when the loan was cleared but continued,, maybe to the end of the year, and she then got a refund of the ovepayment.
BackforGood · 08/04/2021 19:06

@SprungisSpringYaY

Some interesting advice thanks.

By the way if they wanted to pay off lump sums of their loan can they?

Later on.
What's the thresholds of payment?

Eg they earn 50 thousand.. What would they pay?

Well, they can but there wouldn't be any point, unless they were in a position to pay it off altogether.

Once you earn above the threshold - which is about £25K - , then you pay a % of your income each month, regardless of what you earn. The income that is above £25K, that is.... so if you earn £30000, then you are paying 9% of £5K.
So, it doesn't matter if you owe £54K or £32K or £24K or £10K, the monthly amount remains the same.

titchy · 08/04/2021 19:12

@SprungisSpringYaY

Some interesting advice thanks.

By the way if they wanted to pay off lump sums of their loan can they?

Later on.
What's the thresholds of payment?

Eg they earn 50 thousand.. What would they pay?

Current (plan 2) loan repayment is 9% of salary above £25k a year. So £50k salary is obviously £25k above threshold, so the repayments are 9% of £25k which is £2,250 a year, so £190 a month.

Anyone earning less than £25k a year repays nothing.

I'd suggest that you compare the yield that an extra couple of thousand a year saved in repayments will give in terms of extra mortgage - maybe another £10k.

Not much is it, esp when your dc has sacrificed a £50k deposit in order to have no loan repayments, and that extra £190 a month in pocket.

Tinydinosaur · 08/04/2021 19:19

@SprungisSpringYaY

Thanks for see line.

I've been all over Martin Lewis and whilst I know for some people this will be ideal.. Having had the burden and back ground worry of a loan myself.. I'd prefer my dc to either pay it all outright or not go.. Or take very small loans.

They are not near uni age at the moment... They have good savings and I'm wondering what sort of target they may need to cover them comfortably for uni and costs...

This is an insane choice. The money is far better spent on buying a house, instead of the burden of renting. I have a massive student loan. I don't even know how.much, never thought about it since I applied for it. I definitely won't pay it all back.
FTEngineerM · 08/04/2021 19:33

No other debt will ever be so cheap

Now come on, that’s just not true it’s a terrible deal. Plan 2 is 5.6% and you don’t start paying it back until you earn £25k+ or for at least 4 years after you start, that’s a terrible loan.

I don’t know of any mortgage at that rate at the minute.

DP pays £350/m on student loans (and he’s plan 1), that is not an insignificant amount.

It’s obviously a terrible idea if they want to study medicine for example and then decide to work part time in Matalan instead for the rest of their lives but providing they actually want to get a useful degree and then use it it’s not a waste, that’s very short sighted.

Pottedpalm · 08/04/2021 20:04

@FTEngineerM

No other debt will ever be so cheap

Now come on, that’s just not true it’s a terrible deal. Plan 2 is 5.6% and you don’t start paying it back until you earn £25k+ or for at least 4 years after you start, that’s a terrible loan.

I don’t know of any mortgage at that rate at the minute.

DP pays £350/m on student loans (and he’s plan 1), that is not an insignificant amount.

It’s obviously a terrible idea if they want to study medicine for example and then decide to work part time in Matalan instead for the rest of their lives but providing they actually want to get a useful degree and then use it it’s not a waste, that’s very short sighted.

I agree; it’s not free money. You pay interest and 9% is a hefty chunk of your salary.
titchy · 08/04/2021 20:14

You pay interest and 9% is a hefty chunk of your salary.

9% above £25,000. Not 9% on the whole salary. And interest only matters if you're a very high earner as amount paid back doesn't change.

Needahand42 · 08/04/2021 20:22

Student loan debt is incredibly cheap - you don't just look at the interest, a mortgage may be suitable

Needahand42 · 08/04/2021 20:24

Argh, posted too soon! Meant to say you may be able to get a mortgage at 1.8% but that doesn't wipe itself after 30 years and you can't stop paying if you stop earning, which makes the student debt very cheap over a normal earning life.

lovelyupnorth · 08/04/2021 20:30

@poppycat10

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.

Unless he is going to be one of the 18% who pay the full fees back you're mad.

9% above £26k per year is what you pay back regardless of how much they owe. After 30 years it's written off.

Very High earner then maybe worth funding but for 82% it's much better to take then loan.

lovelyupnorth · 08/04/2021 20:31

The interest is irrelevant unless you're a very high earner.

BackforGood · 08/04/2021 20:33

DP pays £350/m on student loans (and he’s plan 1), that is not an insignificant amount.

Firstly, he must be on a big salary for that.
A pp has said she pays £191 on a salary of £41K
However,
My God daughter and her husband are currently renting a 2 bed terrace. She has said that If she had the deposit to buy the same house, her mortgage would be about half what they pay in rent.
So, overall, she'd be far better off if she had had £20K to start with, to have put that aside for a house deposit rather than not taking out the student loan.

FTEngineerM · 08/04/2021 21:14

Not really @BackforGood it’s less minimum salary on plan 1, that’s why I pointed it out.

He may earn a decent amount but £350 is still a massive chunk.

lovelyupnorth · 08/04/2021 21:49

@FTEngineerM

Not really *@BackforGood* it’s less minimum salary on plan 1, that’s why I pointed it out.

He may earn a decent amount but £350 is still a massive chunk.

And what would their salary be without the degree?
lovelyupnorth · 08/04/2021 21:51

@FTEngineerM

No other debt will ever be so cheap

Now come on, that’s just not true it’s a terrible deal. Plan 2 is 5.6% and you don’t start paying it back until you earn £25k+ or for at least 4 years after you start, that’s a terrible loan.

I don’t know of any mortgage at that rate at the minute.

DP pays £350/m on student loans (and he’s plan 1), that is not an insignificant amount.

It’s obviously a terrible idea if they want to study medicine for example and then decide to work part time in Matalan instead for the rest of their lives but providing they actually want to get a useful degree and then use it it’s not a waste, that’s very short sighted.

But if you work Matalan and earn under £26k per year you'd never pay a penny back.
FTEngineerM · 08/04/2021 22:03

That was my point @lovelyupnorth the OP is wondering whether to get DC to save and pay ini fees.. that would be pointless if they wanted to work a job that paid less than £25k because if they took a loan they wouldn’t pay it back Wink

HaggisTheGreat · 08/04/2021 22:29

Realistically, if your kids aren’t near uni age at the moment, guessing how much their uni experience would cost and whether it’s worth using loans is futile. Absolutely anything could happen to fees, interest rates etc in the meantime.
It’s worth saving for your kids, of course, but it’s not worth worrying about the current uni fee rules or what someone on a forum or their DH is paying back in student loans right now. The same rules are very unlikely to be in place in 10 or even 5 years.
When I started secondary school, there were no uni fees and students got grants rather than loans. By the time I went to uni, things had changed a lot.. they have changed much since and no doubt will again.

Kikitree · 08/04/2021 22:42

If you earn £5000 a month then your repayment is only £250....

(I've just checked on student finance website)

Trust me as someone who is trying to put a deposit together please put money towards houses or doing driving lessons and getting them a nice car.

CrazySheepLady · 08/04/2021 22:50

I used to work in Student Finance. A student's savings weren't taken into account in the financial assessment and I doubt that has changed in the last couple of years.