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.

Ds can only take £4422 as a maintenance loan, we are expected to fund the other £5066 per year which is the equivalent of the maximum student maintenance loan of £9488. He cannot take more as it is based on household income.

Ds is hopefully going to Durham and his accommodation cost is £6266 for his first year, self catered. He has already been allocated his college. As you can see he is short. Not everyone can afford to pay £5k per year to support their child at university.

The whole trust thing account becoming theirs when they turn 18 is the reason we never paid into it. Instead we opened a separate savings account for our son and paid into that instead.

Just read through other comments, seems things are different now! Ignore my post!

I'm also in Northern Ireland but thought the student loan company was the same throughout the UK - our system worked that everyone was entitled to a loan, regardless of parents income. Everyone (who applied) received the same amount - for those from lower-income backgrounds, a higher percentage of theirs was made up of grant that didn't need paid back. For those from higher-income families, a higher percentage was made up of a loan which did have to be paid back. In my case, mine was entirely a loan. A few students I lived with in halls had their maintenance made up entirely in grants.

I suppose the expectation was that parents, if well off could top up the grant (if any) amount to save their children taking the loan, but still allowed students who had parents from well off backgrounds who didn't financially contribute to still access funds to study. Which benefitted me because my parents, while over the earning threshold, had a lot of debt and a high mortgage so had no spare cash to help me, so I wouldn't have been able to afford to go without the loan. I don't think it's fair if this has been taken away - what about students who's parents can't or don't want to help them financially, regardless of high their income is on paper?

but they do expect me to make up the shortfall then it changes it somewhat doesn't it?

The government expects you to make up the shortfall.

I'm so sad for your kids that you won't help them out.

I'm so sad for your kids that you won't help them out.

Thanks, goady-pants. Did you actually read anything I've said or did you just want to get a kick out of saying something nasty?

At the end of the day it doesn’t matter what they use it for - house or uni costs - but make sure they have a part time job while studying. There is no excuse for any student to not be working. At least 10hrs a week during term. All my friends and I worked 15 hours a week during term and full time in holidays and still got good degrees.

@Namechange That system sounds so much better. I agree, some parents are unwilling to support and some unable. As you say, income is only half the picture of what someone can afford.

Much better to take student loans; they only become repayable once the graduate is employed and earning a reasonable amount.

You wouldn't worry about money so much if you made a list of priorities.

A 30 yr old bathroom that is clean and everything works is absolutely fine (I've got two. One peach, one baby blue; not what I'd choose but in perfect condition and spotless.

Students don't need a car; it's a money drain they can't afford. Teens living in a city don't need a car. Teens in the sticks can get on their bike.

A family holiday in Canada would be lovely , but Canada will stiil be there after graduation. Meanwhile you could have a great holiday in Orkney or Cornwall. Arrange a house swap . Go pet or house-sitting.

A parents job is to prepare teens for the world of work and adult independence. Encourage them to l;earn the skills they need, academic , domestic, practical. Teach them study skills, how to drive, cook, clean, manage a budget, look after their health ; manners and social skills.

You don't need to worry about buying property or cars for your children. If they are capable and hardworking and want those badly enough they will work and save to do it for themselves and feel tremendously proud of their achievement.

My mother didn’t give me a penny, she couldn’t afford it. I lived at home, paid lodge and ha a fab uni experience. I had tuition loans and also maintenance loans/grants for day to day expenses and worked part time. You don’t ‘have’ to save anything for them
But I certainly wouldn’t be stressing

what about students who's parents can't or don't want to help them financially, regardless of high their income is on paper?

I've known very clever, talented kids with high income parents not be able to go to university because their parent either disagreed with the subject they had chosen or they just thought that they should get a job instead.

I'm so sad for your kids that you won't help them out.

The OP has been paying in to savings for them for years. The money in the CTF is mostly money that she has provided for them. That most definitely is helping them out!

OP, I’d go for a middle-ground option. They take the maximum loan they can. You top up using some of the money you have been putting in to savings. They can choose to work or use the CTF money for any remaining expenses.

Don’t forget that you will have more money then though, as you won’t be paying for their food, bus passes, school uniforms etc. So you may find that you can give them £200 per month each and still put £200 per month in to savings for essentials such as house maintenance and car repairs.

@Hardchoices

At the end of the day it doesn’t matter what they use it for - house or uni costs - but make sure they have a part time job while studying. There is no excuse for any student to not be working. At least 10hrs a week during term. All my friends and I worked 15 hours a week during term and full time in holidays and still got good degrees.

Lucky you able to find a job that fitted around your studies AND obviously studying a low contact hours course/one with no placements.

Medical, nursing, vetinerary, education, performing arts students etc are generally doing around 30-35 hours per week or full time placements

@Hardchoices

At the end of the day it doesn’t matter what they use it for - house or uni costs - but make sure they have a part time job while studying. There is no excuse for any student to not be working. At least 10hrs a week during term. All my friends and I worked 15 hours a week during term and full time in holidays and still got good degrees.

This. I did, and so did my sons. It's not just about money; it's also about adult independence , and learning work skills (timekeeping, dealing with customers and employers and work colleagues of all kinds) invaluable maturity for whatever graduate career they choose.

I'd say that uni costs are exactly what the CTF is about, improving their life chances.
As you live in a big city it would probably be possible for them either to go to Uni locally & live at home and/or move back home afterwards and save whilst working. Either of these options would allow them easily to replace the savings spent on the opportunity of uni.

I also have children if 12 &14 and wish I was organised as you!

I remember your other thread, about your ex. Have you investigated the implications of paying that £10k in instalments rather than as a lump sum? I find it hard to believe that a judge would expect you to prioritise saving to pay off your ex, over giving your dc an education. I’m not sure how you would get advice on that (presumably a solicitor could advise on the terms of the original agreement) but with most debts, willingness to pay and a schedule of payment is acceptable. So does that have to be a lump sum of could you pay him £10 a week forever? I really feel for you carrying this much financial worry.

On the trust fund issue: if that’s what it takes to get them through university, why not? It’s an investment in their earning potential.

And can I comment on term time jobs, not holiday jobs, but term time jobs.

For the most demanding courses at the hardest universities, medicine, oxbridge etc, it is physically impossible to do the required work and hold down any sort of part time job.

So if they are likely to do the hardest courses then they cannot be expected to also do term work.

The holidays are long enough to fit in lots of paid work though.

@Snog

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

Because that money is in the child's name and it would be their choice as to what they use it for. The OP can ask they use their personal savings but the contribution to top up maintenance loans is an expected parental contribution rather than the child paying the difference.

Yes it's what we have the CTF earmarked for. We will hide any correspondence DS gets about it when he turns 18 otherwise he'd likely fritter it away.

If he doesn't go to uni or stays at home then he'll get it for his first car and flat deposit.

It's a sizeable sum as put a lot in when he was younger. I'm not letting him waste it on Tesco meal deals or alcohol.

My parents have been saving into my DS's CTF accounts since they were born, so they both have a nice amount now. DS1 goes to Uni next year, and whilst we don't anticipate he will have to use much of the CTF to support himself (he'll be entitled to minimum loan and we'll be able to cover most of the shortfall), he may have to dip into it.

I would say that everyone I know is saving in the child trust fund for uni costs and are really open with their children about it. Some are saying ad hoc, some five pounds a month.

I think that you just need to be open with them, you've got some funds saved up, which if you go to uni will help fund your living costs.

In essence you are doing the parental contribution but spreading it over years.

Eg instead of finding £5k in one year, you are saving a little bit each month since they are born.

My DD has applied for max loans and she is staying living at home!
She was reluctant but I can’t support her as an adult entirely on my own so she got about £7000 approved.

She got £1200 in her CTF (I didn’t add anything it just did well on its own) and put it straight into the gov house deposit ISA scheme - she literally got there only just in the nick of time before it closed!

DD2’s CTF has done less well and I am not sure if she will want to live out so watching with interest

It’s perfectly reasonable to expect that, and to have a conversation with your children before they start choosing universities explaining that you don’t have unlimited finances, they will have the loans plus what you’ve saved plus their trust fund, and that they’ll need to make it work based on that and so might want to consider that when they apply for universities and accommodation. Don’t stress for the next however many years just because it would “be nice” for them to spend the trust fund on something else. Children don’t have a god given right to be supported solely by their parents through higher education, especially if there’s other pots of money available and it would be difficult for the parents.

Why wouldn't you use the CTF's? Obviously once they hit 18 they take control of the money, but you need to make it clear to them that if they choose not to save it for Uni, that you won't be covering that money. They need to be responsible for their own life choices.

I won't be able to support DD through Uni, maybe a small weekly allowance, but that will be it, due to divorce and having to pay a mortgage until I am 67. Her father is very unlikely to give her anything as he hasn't so far.

It doesn't make you a bad parent if you can't afford to support them through Uni.

Just to echo everyone else do not spend cash on the fees. Get the tuition loans. The way it works now it’s not worth it.

Please read Martin Lewis’ moneysaving expert guide on it before you make a decision

It also depends where in the UK you live. In Wales all students get same maintenance amount with the proportion of grant:loan varying on household income.

It's exactly what we use the CTFs now transferred to JISAs for. DC1 is 17 and has known for years that we have been investing £100 pm since his birth. I've selected the funds over the years and its performance has totally exceeded our expectations.

The portfolio is reaching the point of being able to potentially produce enough income to bridge the gap between the minimum maintenance loan and the expected parental top up. If he continues to manage it well in the future, there should be enough for postgraduate studies/gap year travel/house deposit/whatever. I suspect that I'll be managing it for him for awhile and helping him make decisions as to what to sell/buy if required until he feels he has the time/confidence to do it all himself in the near future.

Yes, there's no guarantee that he won't go off the rails but I'm betting that he won't. It's not a secret in our household that he will start to have access to this when he turns 18.