If you can pay uni fees.. Wwyd

[theredjellybean]

My dd and dsd arw both hopefully off to uni in September this year. We can afford to pay their fees for them (and have done this for older siblings). But someone recently suggested we put the equivalent money into isa accounts, and got the girls to take out the loans, when they reached the point of having to start paying it back we could give them the lump sum to pay it off.
I would have thought any gains we make would be outweighed by the interest on the student loans.
Has anyone else taken this tack?

We paid for all of our children, not that we’d have been entitled to free further education anyway. However, we could have got them scholarships at home for further education abroad but we chose not to. We just didn’t want to be tied into anything or anyone because they had scholarships or a loan. We preferred the independence of paying it ourselves, and paying up front.

My dd hopes to go to med school so it's full five years, she will definitely earn above threshold pretty quickly. My dsd is going to do a media communication and hr related degree... May take longer to get to threshold.
I think that it's more I just don't want them to have these huge debts, it's more of psychological thing. I was one of the first students to have loans, I hated it, this feeling of debt...
I can and will fund their living costs too, not lavishly but we will pay their rent and give them monthly allowance.
I don't think we will be in a position to give them deposits. My dsds will have sizeable inheritance from their grandparents, my dc I intend to give the same from my inheritance (obvs not hoping that happens soon.. Love my dm and dad).

Op, just do it. Why be saddled with a loan? It must eventually feel like a millstone round your neck, something that’s always there in the background rearing it’s head every so often.

We fully supported the children financially and never regretted it or felt we had to justify it to anyone. But then most people we know do that if the children are studying abroad so for us doing it this way is all very normal. Some families will educate one child then they come back and help educate the next one but that’s becoming rarer now that we have good uni’s here for those who need to or want to stay put.

I don’t understand why it’s better to have debt rather than use your capital. Debt is never good regardless of how it’s dressed up.

I am funding two at university (fully) at present. The reasons are my parents did it for me (minimum grant I got was £50 and they made it up to £900 full grant at some hardship - their view was they paid our education and then it was up to us which is a good principle).

Second reason I don't like debt.

Third the children are likely to have higher paid jobs (older ones pay 40% tax in 20s etc) so will be paying a loan back anyway.

Fourth, they keep changing the student loan rules so why court that complication.

Fifth I can fund some of their house deposit too so it is not an either or.

Sixth, student loan gets things wrong all the time - what you have paid back or not so why get involved in all that if you can avoid it.

Seventh, why burden the state and other tax payers if you can afford to pay ?

I am doing it on the basis of an agreement we have that I fund them and in return they take on no debt.

We dont like debt either.

I get more pleasure in having DC start their adult lives debt free than I would from a new car (ours is a 12 year old family handmedown) having a flash holiday, or doing up my house. My decision.

DC seem to appreciate this and have been content to get less money for living expenses than a lot of their peers, and are generally happy cooking from scratch and taking in packed lunches. Eyebrows are raised at students with loans and overdrafts and family top ups who are able to regularly drop £100 on nights out clubbing. Money which is being borrowed at 6%.

Yes, I am sure mine are seeing that contrast too. My car came from my father when he died 10 years ago so must be at least 13 years old.

It all depends on your view of whether it's a debt or a graduate tax.

A large number of your children will eventually have a mortgage. That's a proper debt - no allowances are made there if your earnings drop, so you can't put a student loan in the same bracket.

I think this strategy made sense for the old student loans which were low interest. I think it's about 1.6%? It doesn't make sense for new ones that are 6% interest, unless you have access to accounts higher interest than that !

But OP, if you don't pay their uni fees then presumably you will be in a position to give them deposits?