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.

The money is in their name so whether or not it's a reasonable expectation depends on the child in question which we can get glimpses of but a lot can change between 12/14 and when they get it. I imagine there will be a lot written on it in a few years as more start coming of age and getting access to theirs.

The only thing you can really plan is how much help you're willing to give whether or not they use the CTF as well and discussing that and ways they can use their CTF with them.

Loans attract interest. Much more than the interest foregone from withdrawing savings, which a trust fund is in all but name. So sensible to do and not prolonging student loan repayments.

@newnortherner111

Loans attract interest. Much more than the interest foregone from withdrawing savings, which a trust fund is in all but name. So sensible to do and not prolonging student loan repayments.

That’s completely misunderstanding the nature of student loans, please discount this advice.

I'm baffled that no one appears to have pointed out that it's not your money and you get absolutely no say in how it's spent...

@newnortherner111

Loans attract interest. Much more than the interest foregone from withdrawing savings, which a trust fund is in all but name. So sensible to do and not prolonging student loan repayments.

This is a very ignorant comment.

I can't see any reason why you'd need to use the trust funds if I'm completely honest. It's perfectly doable for DC to get through uni with loans and grants - most universities offer grants, scholarships and bursaries too to top up. If they're cut short then it's up to them if they'd like to get a job or use their trust fund for that - and you can help them out as much as you can and would like to. It's really not something you should be feeling so anxious about. Definitely make no decisions yet because the situation could be very different in a few years as the thresholds and bands are constantly being reviewed. You can't really budget for uni unless you know where they're going - accommodation in Oxford is double that of Newcastle.
Also, it's worth noting that if you write to Student Finance and state that your child is financially independent of you and you won't be supporting them or financially linked with them during their degree (which makes sense because they're an adult) then DS can be assessed as an independent student and get access to the full loan/grant/bursary as his "household income" is then only based on him as a person. He can't live at home for uni if you do this though.

When they get to say, sixteen, seventeen, sit them down and tell them that this is roughly the student loan they will get, this is what you can afford to contribute monthly and this is the amount they have at present in their CTF

This is what I’m intending to do. I’ll be explaining to them a) what we can afford to contribute b) what finance is available and what’s sensible c) what’s in their own long-term savings they can access at 18. Then I’ll be helping them evaluate what different courses and universities cost.

The CTF/JISA savings are for them when they reach adulthood. It can be for a car, for a rental deposit, for a course they need if they don’t go to university. Or it can be for help with uni costs. If we come into loads of money and can afford to encourage them not to spend it but keep saving for a house deposit then great. But realistically we don’t have that option so they’ll be in charge of their finances at 18 and need to understand their choices and the costs and their assets.

I certainly don’t think of that money as ‘extra’ for them to do as they like with no input from me. Ultimately they can do as they like, but they’ll understand that comes as a choice because our funds will only stretch so far.

@RipplesBips

I can't see any reason why you'd need to use the trust funds if I'm completely honest. It's perfectly doable for DC to get through uni with loans and grants - most universities offer grants, scholarships and bursaries too to top up. If they're cut short then it's up to them if they'd like to get a job or use their trust fund for that - and you can help them out as much as you can and would like to. It's really not something you should be feeling so anxious about. Definitely make no decisions yet because the situation could be very different in a few years as the thresholds and bands are constantly being reviewed. You can't really budget for uni unless you know where they're going - accommodation in Oxford is double that of Newcastle. Also, it's worth noting that if you write to Student Finance and state that your child is financially independent of you and you won't be supporting them or financially linked with them during their degree (which makes sense because they're an adult) then DS can be assessed as an independent student and get access to the full loan/grant/bursary as his "household income" is then only based on him as a person. He can't live at home for uni if you do this though.

It’s not quite as simple as you’ve painted it here to get your DC assessed as independent. And with tuition fees etc the student loan isn’t enough to live on now, and bursaries and grants can’t be relied upon. It’s a shame, but it’s really not possible if you want your DC to get the most out of university to just say you won’t support them. It’s setting them up to fail. Using CTFs is much more sensible in this scenario.

Nearly all the trust fund money came from the OP anyway. Minus the initial 250 plus whatever interest that would have earned. So I don't see why on earth you should feel you have to give them separate money for university.
To be honest it's their problem. As long as you top up whatever loan they are eligible for to the maximum means tested (if the trust fund isn't enough for that) then they can choose to get a job to earn the extra or live in cheap accommodation.
Just make the amount clear to them and let them decide how to fund university.

I would suggest trying not to touch the money and using it for a house deposit instead. Encourage them to get the maximum loan amount instead.

My parents gave me access to the money they saved up for me whilst I was still at university. Consequently it got used for university costs. I still don't have my own house over 10 years later.

My sister's got access to their money at the same age, but they had already graduated, so they could use it as house deposits.

I'd be encouraging them to not touch it until after university. I'm 'lucky' that I have no student loan. However, I have no living security either. The amount I'd be paying monthly on a loan is far less than my extra living costs now. It would be far cheaper for me to be paying off a mortgage and any remaining student loan.

I can’t believe how much parents on mumsnet fund their children beyond 18. I am not against supporting them through uni, but the costs people are mentioning are ridiculous.
If you can afford to save £500 a month atm then you’ll be able to Chuck them £50 a week each when they’re at uni. I wouldn’t worry. You earn well and people in much worse situations manage it.

@FlyingSquid

I would say: You top them up to the max loan amount (I.e. what they would get if you had a low income). Then they choose whether to make up any shortfall by using their trust fund savings or working through the summer, or a bit of both.

This is what we have done. We give DD the difference between the maintenance loan she gets and what the maximum would be. She then worked the summer before uni to make some extra money. I think her rent is about £7k so she has to budget well and is pretty good at this using a student budgeting spreadsheet she found.

If the student is in London, they get a higher maintenance loan. In many ways London is not much more than anywhere else, as so much can be done without paying for transport, and lots of free activities.

@RipplesBips it's definitely not as simple as saying your kid is financially independent of you! You need to provide proof that you are estranged and have been for some time, that they haven't lived in the family home etc. Don't you think everyone would do that otherwise!

OP plenty of students get jobs to help them through uni, mine is coming to the end of her second year and has worked in pubs etc (pre covid). now applying for other jobs. Prior to this we topped up her maintenance loan to cover the rent (approx £100 a month), and her grandparents give her £200 a month for food. She receives the minimum loan.

When we visit we take her food shopping and also send the odd food parcel/money for takeaway.

Of course you can! We have! That's what trust funds are for. Get the maximum available loan. Contribute what you can genuinely afford and use trust fund money to cover the shortfall. Tell them not to blow it all as the more of it they keep, the4 better deposit they have for a house. My DC are being sensible because it's their own money.

Loans attract interest. Much more than the interest foregone from withdrawing savings, which a trust fund is in all but name. So sensible to do and not prolonging student loan repayments.

Not true - student loans are not like normal loans. Most people never pay them back.

I feel differently to many.

My children's CTF is their money.

The parental contribution is my bill, assessed on my income. I wouldn't take my children's money to pay this bill of mine, any more than I'd take it to pay the grocery bill or the council tax.

It's means tested on parental income for a reason, because it's expected that parents pay the top up. If the student was meant to pay the top up themselves, it would be means tested against the students income and savings.

Basically, if you take this money, the OP is making herself better off at her children's expense.

I understand that she contributed to the savings, but why if the plan was to snatch it back at the first opportunity?

My children have pretty hefty CTFs, they won't be using them to pay for uni. I would like them to use them to pay for the deposits on their first bought home - but ultimately it will be their money, so it will be up to them.

It’s usually advised to take out student loans and save whatever else, since it’s that much harder to acquire lump sums later.
Dh and I recently discussed this when putting cash into ISAS for Gdcs to access at 18.

And as pps have said, pick universities where accommodation costs are cheaper. There are plenty of good ones away from the ridiculous-cost zones.

Yes, it’s fine to use them for uni costs. I would also prepare your children now for the need to also have a part time job whilst at uni.

I do understand that point @mrsm43s and it is broadly how I feel, but I suppose my post comes from the perspective of what if I can't afford it comfortably and, because I haven't been financially secure beyond a monthly basis up until very recently, that thought makes me quite anxious. Also, just because something is means tested doesn't mean the decision is as affordable for those concerned as the computer says it is.

I'm also conscious of making the most of time left before my dc fly the nest and things like wanting to take them to Canada (something they have both said they'd love to do) could impact on my ability to pay these fees. Therefore I think maybe I shouldn't do that and should save every penny, but that's a shame isn't it? It could well be that I can afford both, but if I decide to go to Canada, then the car packs up, then a couple of other things happen that impact me financially (but don't affect my income so their loan/grant would still be capped)it's nice to think that asking them to contribute from the CTF wouldn't be the worst thing in the world. I'm certainly not looking to 'snatch' anything back and I wouldn't be better off at their expense - it's more about what if I don't have these £££ sitting around when the time comes?

When I said I save £500 per month, for the last few months those savings have been taken in home improvement (essential) costs, so the long-term savings haven't been added to at all for a few months, though they haven't been touched either. This is the sort of thing that makes me think maybe I shouldn't have spent that money - but ds had a window that couldn't open (in a loft bedroom that gets boiling at this time of year) etc etc. The £10k I owe ex doesn't help either.

But hopefully, everything will be okay and I will manage it and the dc can top it up or work or whatever as they choose. I think the advice about talking to the dc about it once they are starting to look at universities is really helpful and I'll certainly be doing that.

Don’t discount London universities as too expensive, some offer bursaries to offset the additional cost. My DS is at Imperial and he gets full maintenance loan with extra London allowance and a bursary from the university which pays for his rent and living expenses

London may be more expensive for rent, but when you’re there and renting private (so staying for the summer from second year on) it’s super easy to get part time work. So they might find actually that it works out easier on the finances than somewhere cheaper with less student work going

Depending on where you stay, your loan CAN cover your rent
Yes but on Ops wages its unlikely they will get more than the minimum maintenance loan. My dd is in cheapest place for accommodation in uk and that will barely cover the rent there

@Flowers500

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

My ds is going to uni, and maint loan is about 5.5k, and total cost is 8k, so we have to top that up

@flyingtartar

I do understand that point *@mrsm43s* and it is broadly how I feel, but I suppose my post comes from the perspective of what if I can't afford it comfortably and, because I haven't been financially secure beyond a monthly basis up until very recently, that thought makes me quite anxious. Also, just because something is means tested doesn't mean the decision is as affordable for those concerned as the computer says it is.

I'm also conscious of making the most of time left before my dc fly the nest and things like wanting to take them to Canada (something they have both said they'd love to do) could impact on my ability to pay these fees. Therefore I think maybe I shouldn't do that and should save every penny, but that's a shame isn't it? It could well be that I can afford both, but if I decide to go to Canada, then the car packs up, then a couple of other things happen that impact me financially (but don't affect my income so their loan/grant would still be capped)it's nice to think that asking them to contribute from the CTF wouldn't be the worst thing in the world. I'm certainly not looking to 'snatch' anything back and I wouldn't be better off at their expense - it's more about what if I don't have these £££ sitting around when the time comes?

When I said I save £500 per month, for the last few months those savings have been taken in home improvement (essential) costs, so the long-term savings haven't been added to at all for a few months, though they haven't been touched either. This is the sort of thing that makes me think maybe I shouldn't have spent that money - but ds had a window that couldn't open (in a loft bedroom that gets boiling at this time of year) etc etc. The £10k I owe ex doesn't help either.

But hopefully, everything will be okay and I will manage it and the dc can top it up or work or whatever as they choose. I think the advice about talking to the dc about it once they are starting to look at universities is really helpful and I'll certainly be doing that.

Having fiddled around on some calculators, it looks like (at current values) you'd need to give each child approx £3200 per year, if you are still earning around £50k . So a bit over £250 per month, up to a little bit over £500 a month if there are any years that they overlap (likely to only be one year). You can save that amount already - so you can pay it month to month at the time your DC attend by simply reducing the amount you save each month. Obviously something could happen to your job etc, but then your contribution would reduce accordingly. So basically, your contribution will be (as it should be) affordable out of your income - not digging into savings.

Now, I'm not saying don't save (I always think that savings are a good thing), but I see no reason why you would need to save much to expressly cover uni costs, at the expense of taking a holiday or doing essential house repairs. Even a mere £3000 in savings (to ease the overlap year) would mean that you pay £250 per month towards Uni costs, and still can save £250 each month whilst your children are at uni. That's very affordable.

I can't see any justification for taking their money for this.
I think you are overly worrying . You don't need to have saved the entirely of the top up required before they start uni! It's just another bill to be paid out of income as you go along.