Is it a good idea to pay university tuition fees off upfront?

[SunnyDays01]

Apologies if this has already been done to death but if anybody has any advice regarding tuition fees in particular I'd be grateful. Just about to embark on the student loan route and it occurred to me that there has been a lot in the press regarding the pros and cons of paying university fees upfront. Anyone have any advice/answers? Thank you.

[DontDrinkandFacebook]

The most ridiculous and ironic thing about all of this is how few students (relatively speaking) will actually end up paying back their loans in full due to having decent, graduate level jobs with a proper salary.

When you look at all the ways not to pay back your student loan you see that so many graduates end up in minimum wage or low level jobs and never really progress from that despite their degree, or they get pregnant and then don't work for years, or they go abroad to work and don't return, or at least not until the loan has been written off, or in the case of many EU students just sign up for courses, take the student loan money and then just drop off the radar, never to be traced again.

When you really think about it, it starts to look like one massive smoke and mirrors exercise where the highest achieving students who go on to get true graduate level jobs and who were never in receipt of any low-income related grants or bursaries are the ones who have been subsidising all the others, many of whom would have been better off if they hadn't bothered going to uni at all, and had entered the workplace at 16 or 18.

[lalsy]

Ullen - I know - it may well cost more, and many costs won't be divisible down to an individual. And yes, I agree about all the costs and the work - my family has several academics in it, several friends are too, I do know the work involved. (But the short assignments do mean she never gets to write, formally, about many of the texts or themes she studies.) My main point though was that there was no link. The conservatives thought letting universities set their own fees up to a cap would result in competition - and they were wrong.

[TheWordFactory]

Labour have pledged to reduce tuition fees to 6k.

But they haven't said where the shortfall will come from ...

[escondida]

Net Present Value was big part of my work for a few yrs and I don't think it's an easy thing to calculate at all. Maybe I'm just thick.

Anyway, what people are talking about when paying fees up front is peace of mind. So the decision becomes about levels of uncertainty, not just cost effectiveness.

They are all valid ways to make the right decision for oneself.

Plus only people who can afford to pay up front have this choice, they can afford the less economical solution.

I am pretty sure DC will take the loans, I find the terms very generous. But I can't help but worry how much taxpaper money is wasted in the system due to costs of administration of the student loans. I think I would prefer a fully privatised system where only the very poorest kids could get full student loans & everyone else had to negotiate with banks.

[TalkinPeace]

yearofthegoat
Each loan comes with fixed repayment terms.
The current ones its a percentage of income over a certain figure
so I'm not sure how you think that can change.
The loans have never had their terms changed retrospectively ( as that would affect every other type of loan )

And yes, as escondida says, NPV calculations are complicated and involve scenario iterations.
I happen to enjoy running them

TBH if you have the spare cash, plonk it into your kids ISAs and then let them decide upon graduation what they want to do - same cost to you, more flexibility for all.

word
I think the £6k thing will be dropped as the only beneficiaries will be the highly paid - the joy of policy wonks not understanding national median salary data

[senua]

how much taxpayer money is wasted in the system due to costs of administration of the student loans.

Never heard of job creation schemes?

A lot of people seem to take the stance that you should take the loan and not worry too much. If you don't earn enough to repay then it gets written off anyway after a few years.
Is this moral? Is it equivalent to tax dodging?

[TheWordFactory]

talkin I believe the Eds are in battle over it currently.

Ed M is adamant he will push it through. Ed B keeps being asked how it will be funded and is sick of fudging.

The universities have gone public, demanding answers on funding. Will they be left with the shortfall? Or will government pick up the tab?

Simple question!

On paper reducing tuition fees seems like the right thing to do, but in reality it's all a bit of a mess.

[TheWordFactory]

Howcan Ed Balls was alluding to that in Radio 4.

When asked outright if the universities would have to meet the shortfall or government, he started talking about the current system which meant so many loans were no repaid.

If more loans were repaid then there would be money for the shortfall.

There's only one way to get more loans repaid!

[SecretSquirrels]

FishWithABicycle I rather like your idea of topping up their income to make up for loan repayments. Saves the capital for possible home deposit and hedges bets nicely.

lalsy Your DD's contact hours are very low compared to DS1. In addition to about 20 hours a week contact he has a high turnover of work marked and tested. Different subject no doubt but feedback is important to every subject.
Your comment She might as well be at home strikes a chord. Last week we took DS2 on a tour of Edinburgh university. Our guide, a stunningly articulate second year, said that all lectures were recorded for those who missed them. He had been ill in the previous week and watched his lectures from his room. DH has muttered ever since that students could do it all from home, cut out the living costs and get the degree done much quicker as well instead of only having 30 weeks a year at uni. (Tongue in cheek, he wants them both to have the experience).

[TalkinPeace]

howcanitbe
I'd be interested to see the links on altering the terms of an existing loan as that falls so far on the wrong side of unfair contract terms its unreal.

Each year they change the terms a bit, but loans one already has are set in stone - all the Concentrix stuff is just chasing up people they think are deferring outside the rules.

But Y Y Y to the fact that Unis were stuffed with the new scheme and stupid unfunded pronouncements will hurt the degrees we need more than the ones we don't yes Solent I'm looking at a lot of yours

[Moominmammacat]

Right, here's a new problem. We bought a house for student DS in his name. The rental income is over £24,000 ... he's only taken out a loan for tuition fees this year, in his 3rd year. Will he have to start paying back now? Should he have the loan at all, given the income?

[uilen]

DH has muttered ever since that students could do it all from home, cut out the living costs and get the degree done much quicker as well instead of only having 30 weeks a year at uni.

But passively watching lectures is only (a rather small) part of studying. Of course people can self-study but studying in isolation works for very, very few people. Open University courses are structured completely differently to allow for the fact that students are studying much more on their own.

BTW 30 weeks at university should correspond to a minimum of 35-40 weeks studying for a student who wants to do well. I very much doubt most students could manage a 3 year degree in 2 years.

[TalkinPeace]

Nothing in here
www.sfengland.slc.co.uk/media/666045/sfe_t_c_guide_1415_d.pdfabout the ability to change the terms of the loan - other than the interest rate

[SecretSquirrels]

uilen I did say he was tongue in cheek . Also, even only half way through his first year I can see that DS is going to be studying through much of the time when he is at home in the holidays.
Moomin Pretty sure the fees element of the loan is not means tested. I presume the rent is taxable though.

[Merrylegs]

As others have pointed out, it is the maintenance loan that will need topping up if you only get the minimum.

As an eg we have to top up by £7000 a year (v expensive uni city).

Add 9 grand to that for fees and you're talking about a lot of cash each year.

[morethanpotatoprints]

My dc couldn't afford to pay them all at once so had to get loans.
you don't have to pay it back until you are earning a good wage anyway.
if you pay them all at once and then fees are scrapped you'll be really miffed.

[TalkinPeace]

Howcanitbe
Here is the actual SI
www.legislation.gov.uk/uksi/2009/470/contents/made
(I'm a sad muppet, I regularly read primary legislation)

By the look of it, the subsequent SIs have made the "threshold" become index linked and the "interest rate" become index linked
but the 9% rule is unlikely to change - if nothing else because employers are used to it.

DH's PGCE loan was one of the ones that went into negative interest for a cvouple of years - which was a laugh.

[homebythesea]

we plan to pay up front because the 3 years of fees is actually less than one extra year of school fees and we feel that if we have the money we should pay it rather than potentially saddle the state with an unpaid "debt" if DC's circumstances means that any loan is in fact not repaid. I know it doesn't make sense in some respects but we have the money and want DC's st start life unburdened

[TalkinPeace]

Howcanitbe
The 2009 SI was amended by the 2011 one www.legislation.gov.uk/uksi/2011/784/pdfs/uksiem_20110784_en.pdf
NB in clause 7.6 it says the threshold will be uprated by inflation

homebythesea
If you have the cash, keep it in your family by putting that amount into your child's ISA account each year and then on graduation they can clear the loan, or use that money for a house
but handing it away for a course your kid may not finish is not good financial planning.