WIBU to expect teens to spend child trust funds on university costs?

[flyingtartar]

My dc are 14 and 12 so it's not an immediate issue but I'm increasingly thinking about costs when they are in university. The eldest is very academic indeed and it's so far looking likely that both will go.

I'm divorced and get nothing from ex who has been poor, although about to come into a considerable inheritance from what I hear, but obviously his contribution is not something I can depend on. From research I think I need to save about £7-8k per child. I earn about £50k and usually manage to save about £500 per month but also have to save £10k for a payout to ex when ds2 is 21 and have a number of largish jobs to fund around the house as well. Eg bathroom hasn't been touched in 30 years, just had to replace a faulty Velux window in ds1's bedroom, had to replace the kitchen last year as it was falling apart, my car hasn't cost too much up to now but has about 110 000 miles so won't last forever etc. There's always something that takes my short -medium term savings.

I have £26k put away from an inheritance and that would probably cover the £10k and most of the university costs but it would be tight and would then leave me with no savings.

I get so anxious about the future and money. Once travel opens up I'd love to take the dc to Canada as it's somewhere they'd both love to go and I absolutely loved travelling with them in Europe before Covid hit, but that would mean dipping into the £26k a bit. Not a lot, but I feel like I shouldn't touch it at all but then what's the point of everything if we can't have a treat now and then?

Looking at paperwork I've realised the dc's trust funds (the ones that labour gave out of £250) are worth about £7k - obviously ds's is a bit more. Would it be UR to say if needed at least some of this should go on the university costs? DS is adamant he doesn't want a car as he's very environmentally conscious and we live in a city and he will probably go to uni in a city too so he sees it as unnecessary. Obviously there is also a deposit for property but hopefully he'll earn well in his 20s (and ds2) and if I downsize at some point then I'll be able to help them out.

I would feel a bit more comfortable knowing using the trust funds is an option but don't know if it's completely UR.

Do you mean tuition?

It's a much better idea to get the loan for the tuition fees and then use the money for a house deposit.

Echo what @Hwory said.
Even the richest kids I met had tution fee loans

No, from the research I have done it seems that, yes, you take a loan for the fees but it doesn't cover living costs and parents are expected to top those up depending on earnings. So my idea includes taking the loan and using the fund to top up living costs. I've got my info from Martin Lewis.

For us we had to save £30k for uni to cover accommodation costs in. London. £8k per child may not be enough, especially if they study in London.

Why wouldn't you put trust fund savings towards uni costs though?

I've read a lot about uni student finances over the last year due to dc going in Sept.
All the advice is to take maximum loans possible for funding uni and use savings for afterwards, whether that's house deposit, car, pension etc.
It is because the repayment of student loans is very different to any other loan. As someone who is very debt averse it has taken some effort to get my head round, but (depending on choice of career) it is very possible that dc will never pay back all the loans. Money saving expert explains it well.

How much will they need?! They’ll have the loan to cover fees and it will also essentially cover rent, then a pet time job and a small top up should be sufficient. Most of that money could then go towards a mortgage. I don’t think there are any big issues there

Absolutely use the funds for uni living costs. That is what everyone o know is saving the funds for. Loan for fees and child trust fund savings for living costs

Yes, just to clarify, dc will take out the maximum loans possible but I'm given to understand that this won't be enough and parental contributions will also be needed.

Snog Yes, MSE points out London costs more - I suppose I'm just hoping they don't go there! I don't know why I'm querying using the the trust funds. I suppose because it's seen as something the dc do as they like with and I should be providing the university costs. It's like making them pay it themselves and therefore unfair?

It’s 100% fine to use for uni costs, yes!

They have student loan DS for tuition and for part of their living expenses, linked to parental income. Then it’s them getting jobs (although not so much in a pandemic) and us saving and making up the difference as best we can.

Those Child Trust Funds were to give them a start in life, rather than cover the parental contribution to their education.

no, no, no.

The whole original idea of child trust funds were introduced at the same time as increased uni costs. Even in the original idea the plan was to use them for uni costs.

They’ll have the loan to cover fees and it will also essentially cover rent

😂😂😂😂😂😂😂😂😂😂😂😂
Nope. Not even close.

@NeedNewKnees

They’ll have the loan to cover fees and it will also essentially cover rent

😂😂😂😂😂😂😂😂😂😂😂😂
Nope. Not even close.

I don't know why you had to post it like that, as if you're openly laughing at the person who suggested this.

Depending on where you stay, your loan CAN cover your rent. Usually not if you're in London or if you choose the most expensive catered accommodation.

When I was at uni (not very long ago!) I had £500 a year left over after all my bills (including rent, phone and travel card) so I just got a part time job on campus to fund the rest.

Yeah that seems an ideal use of the funds to me. Like you say they will be taking the max loan.

@NeedNewKnees

They’ll have the loan to cover fees and it will also essentially cover rent

😂😂😂😂😂😂😂😂😂😂😂😂
Nope. Not even close.

It depends on the accommodation. A few years back, central London uni—loan covered rent during term time. Yes definitely not fancy accommodation, but basic. Some of my friends did loan plus overdraft for rent and minimal living, with parents paying for them over the holidays. Others did loan for rent, then part time job for living.

You do seem super organised and money savy, OP! Take it step by step!

I think you’ll have to have a conversation with your children. If they want to go to university that’s fine, but this is the loan amount they’ll receive and this is what it will cover - if it’s not enough, there is a pot of money to use (the trust funds). If they don’t want to use it, they have to rethink their university plans and go somewhere cheaper/take a gap year and save the equivalent/find bursaries and scholarships to cover it etc.

OP there are 2 separate loans for university. One covers tuition fees and the other is the maintenance loan for living costs.

The maintenance loan is means tested based on your households income.

Some people have enough money from the loan to cover all their living costs and others get the minimum amount which rarely covers the cost of rent. Then there are lots of people in between who need money from their parents to varying degrees.

Using the trust fund money makes sense if they do need a top up, there’s a calculator on the student finance England website where you can put your income in and have a look at what they would qualify for -

www.gov.uk/student-finance-calculator?step-by-step-nav=18045f76-ac04-41b7-b147-5687d8fbb64a

As ds's child trust fund is worth about £700 (he is now 17 and gets it next year) I can only assume that you added to it over the years. In which case it is entirely reasonable that you tell them to use it towards your parental contribution.

On current figures on a salary of £50 assuming your child goes to uni outside of London you would be expected to top up the student loan to the sum of just under £4,000 per year.

@NeedNewKnees

They’ll have the loan to cover fees and it will also essentially cover rent

😂😂😂😂😂😂😂😂😂😂😂😂
Nope. Not even close.

It depends which city they are studying in. Halls for first year is normally the most expensive. More so if they opt for catered halls. Neither of mine chose catered. Both got the minimum loan which I think is what the OPs children would qualify for too. We paid approximately £4000 per year top ups for each of our DC. If they can work part time then they will need less of a contribution from you OP. And why not expect them to use the trust fund. For the poster who said this is to give them a start in life surely a university education is exactly that. A start in life.

My DD is going in Sept. Loans cover tuition, and then the living costs loan is means tested, so most kids only get about £4500. The max living costs loan is about £9000. So parents need to top up. Accomodation costs vary a lot. DD is looking at Warwick, and there is a big difference between the cheapest and the most expensive. She had to put 6 choices, and has put 6 of the cheapest, we'll have to wait and see which she gets.
We put money into a child trust fund in case it would be needed for uni, but we now think we will top up uni loans without it, and save the trust fund for if they want to do a masters or PGCE or if they need a house deposit.

Urrmmmmm how did £250 become 7k? Did you add to it. Mine is nowhere near that!

The full maintenance loan outside London is c £9k.

Ours can take a loan of £4K pa so we top them up to c £9k pa and more than that they need to fund with part time jobs etc. Of course the £5k pa top up means less to repay too.

I think on the OP’s income, the children will be able to take a loan of £6k pa. So the amount of £7-8k is not far off topping up to £9k for 3 years.

I would have no hesitation to use the funds for this purpose.

Yes, I've added to the fund and we used one of the stock market providers (the government recommended one) which means it has grown more than if we'd had it in a standard account. I'm very risk averse but wasn't back then and this has paid off (unless it all disappears over the next 4-6 years of course!).

Thank you for the link above. I put in my current figures and it says ds would be eligible for just over £6k living costs. Then I looked at Leeds University (one he's vaguely mentioned) and with mid-range accommodation (about £20 per week more than the cheapest) he would be about £1k short. And that's just accommodation, obviously. These figures will of course change over the next four years but I can only see them going up so there is definitely going to be quite a shortfall, wherever they end up going.