Saving for university ?

[HoopyFroodDude]

Are you saving for your children to go to university ? If so do you mind me asking how much?

I have not planned for this but have been inspired by another thread about university debt to start. Do you have any tips ?

I self funded through university (my mum was a disabled widow so family help wasn't there) and it wasn't actually that bad... Yes I worked all the hours under the sun (I was working 30hrs a week in a shop during term time in my final year) and yes it was hard to fit study around that, but I managed, didn't starve and came out with a 2:1.

Riven, I wouldnt worry about your daughter opting for an arts degree per se. To a large extent, the university she chooses is almost more important than the subject.

People say "oh do a degree that leads to a well paid job" but the critical thing is to choose something viewed as intellectually rigourous so the traditional subjects are best if you dont have a definite career path in mind.

Many of the best paid graduate jobs- investment banking, asset management, chartered accountancy, management consultancy, civil service grad scheme, and some of the most popular- journalism, advertising etc- have no preferred discipline for applicants.

However, they do have preferences re Universities and they like to see some work experience/ internships

Ha ha- I did history at the Uni on the fens- my dad was the same as you!

The good Uni plus some relevant work experience during the hols will get her job interviews, fear not (so long as she doesnt get a Des )

One of the good things about the UK is that for many of the well paid professions (law, accountancy)you do not require the relevant degree- it's all post grad.

I wish I'd studied English But we were told that there was no point doing an English degree as English graduates were ten a penny. My English Literature A level was the subjest that I actually enjoyed the most.

I studied English, not that you'd be able to tell unless you want to teach, which i don't, complete waste of time.

But then I studied Economics, and now teach nursery school children, so English would probably have actually been more useful!

wow in awe and slight shock at anybody being able to save £60k...

the average income in the UK is around £20,000k (if you even out full and part-time workers) - meaning that for families where 2 parents are around and able to work the average income is £40k a year (slightly gutted to realise my family earnings are below the mean level...). Who the hell can save £60k on this, never mind the pension? Sticking away £100 a month for 18 years is beyond me, and that wouldn't bring anywhere near that much.

Looking at this thread it's not clear people understand how the tuition fee system works. The tuition fee loans cover all the fees and DC should take out the full amount. The loan in real terms is interest free. There's no obligation to repay unless the graduate is earnign over £15k and then it's 9% of salary. So, if DS is earning £16k a year he repays 9% of £100O, ie £90 a year. In effect this works as a 9% graduate tax. If your DC is not working they don't have to pay anything. If DC haven't repaid after 25 years the loan is written off.

It would be finacial madness to save up and pay for tuition fees for a first degree upfront.

Living costs are different but in my bitter experience its a post grad which is the killer and that's the one worth saving for. No government loan available for post grads. I had to take out a bank loan and repay £240 a month for 8 years, argh.

Meant to add that the poorest third or so of students get their tution fees (for first degree) paid by a grant.

Debt is debt it doesn't really matter if it's interest free or not, it stops you doing other things like buying houses for example as it's taken off the multiple that you can borrow.
It's money you can't spend on a car or new clothes for work, it impacts on the graduate and the economy.
The culture of it doesn't matter as it's interest free in real terms be it for student loans or a new sofa is what has caused this financial mess, sooner or later it has to be paid back.

Patsy - I woukd bet anything that tuition fee caps are about to go.
If the best unis are then allowed to charge say 10-15k per year ( in line with independent day schools) it will be interesting to see if the current perferential loans are offered. I suspect not.

The interest rate on student loans goes up from zero to 4.4% on the 1st September. If you have, for example, a DS who is starting university this autumn you should bear in mind that what he/she borrows in Year 1 will be subject to interest from the day it is received.So if your child borrows around £7k this year, next year and the year after the sum repayable will be considerably more than £21k even on the child's graduation day.

Mama - I take your point on a macro level but I think the distinction does matter.

Youngsters, in particular the poorer ones, are being put off higher ed becuase they hear headline figures off £20k debt etc. If they were told they were going to have pay 9% graduate tax for a maximum of 25 years they might feel differently. In effect it is a graduate tax, it's just a shame imo each student gets an individual debt amount rather than 9% on every graduate for a set number of years.

A hard debt, ie, you have to pay the bank back a specific amount every month come what may is properly constraining. My £240 a month stopped me travelling, buying a flat, lots of things.

Lichtik - you might be right on tution fee caps. Tuition fees are massively subsidised by government at the moment. Given the budget cuts it may be that the cap will rise significantly and the subsidy will be reduced.

It will be interesting to see if loans will be still be offered at all for some courses.
The chances of recouping the money from some degrees must be minimal.

Anyone I am currently in Uni with who does not work and recieves money from their parents really does not seem to appreciate it. I work 28 hours a week on top of a 30 hour per week course and I work harder on assignments and recieve better grades than the majority of those whose parents pay for them. DP has just finished a five year course (no hope of getting a job at the moment though) and he supported himself by working nights in a chipper. Here in Ireland we don't have to pay fees as such though, there is a yearly 'registration fee' of E1,700 this year, the fee goes up by about E200 each year and doubled last year.

lilymaid do you have inside info on that interest rate? I've just spoken to the loans company when Id read your email and nearlky died of shock - they said it will be going up from 0% in Sept but noone knows what to. Let's hope its less than 4.4%!!!!!! [queasy emoticon]

Lilymaid - the interest on student loans is pegged to inflation (the Retail Price Index rather than Consumer Price Index if that is of any interest).

It was zero last year because inflation was (unusually) at minus 0.4%. Inflation has soared since then and is now 4.4% so the loan rate is going up. This is still zero interest in "real terms" because everything else is going up at the same rate. Not my salary though, which has been frozen for 2 years.

Hmmmm its apparently the rpi in the preceding march, or base rate plus 1%, whichever is lower....so likely to def not be as high as 4.4%. Thank god!

Riven - hear, hear! Lots of reports of grads being out of work, or unable to get graduate-level jobs. Not a surprise! Grad-level jobs do not account for 50% of jobs, nor even 40%, so why have 40-50% of the population go to university, and end up with huge debts to no purpose.

I'm not saving for Uni for the kids. We are sending them to private school and that will take up most of our money for the foreseeable future...

FionaSH - article here:-

www.guardian.co.uk/money/2010/may/02/student-loan-interest-rates-inflation

If fees are going up that much there really needs to be some kind of overhaul of the system to either bring the fees down or help fund them.

The fees could be reduced if the OU system was used for some of more courses - a learning from home for one half the time and going away to Uni for the other half. Given that courses often run Oct-May/June they could perhaps make it 4 months on-site and 8 months off site so three different groups of students could use the facilities on a rotational basis.

Or maybe there could be the chance for some students to earn their fees and expenses buy taking part in the running of summer schools for secondary and A Level age pupils. Obviously this would have the be done under supervision.