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.

Howcanitbe
I am in the unusual situation that both DH and I work for companies that we control.
Therefore it would be entirely possible for us to manipulate our income so that we earned £23,999 in a tax year so that the kids got maintenance grants rather than loans, without any real impact on our lifestyle.
BUT
I think the folks who work for Unis might just get grumpy at me if I did

Interestingly with inflation falling at the moment, the month that the index link is applied, if at all, can be critical - another thing that the SPADs who come up with the ideas tend to forget!

I doubt it will have had an effect on anyone's economic decision making - the first students on the £9k regime don't graduate till this summer!

Talkinpeace- I imagine we can pay year by year rather than the full £27k on day 1 ?

It has already been mentioned upthread. Another reason you stop paying is going overseas. Like Australia. Then you no longer pay the loan. It happens a lot in NZ. We have fees since the 90s and the system is bankrupted. So many of the loan holders are overseas and in arrears. You are still supposed to pay when abroad but no one does. The gov is trying to prosecute those in oz to pay. I guess the UK can work out something with the likes of Germany. But a move to any of the English speaking destination will mean a effective write-off.

I would keep the money and pay a house deposit.

Ah right! I doubt many people are in that position to be honest. Most people still have mortgages by the time their eldest goes to university, and often there's a sibling or two following on, so five, six, seven years of reduced income just to save the repayments on the means tested bit of the maintenance loan seems a bit extreme.

Twolittleterrors
The UK loans are still due to be collected if you move abroad and with more and more data sharing between Governments I suspect that loophole will soon be closing.

It's not really worth reducing your income I don't think for most people - the grant they can get is only about £5000. They still have to get a loan for the rest, and a loan for the 9K tuition fees each year, and if you genuinely had that low an income you'd probably struggle to give them much of a top up to their maintenance grant, which is what they really need.

Twoterrors - rather than encouraging my DCs to emigrate for the rest of their lives after graduation, I would suggest they consider studying abroad though. You can do degrees in the Netherlands in pretty much any subject entirely in English with no tuition fees and just a one hour flight from most UK airports.

Howcanitbe
I suspect that there are so few people able to manipulate the system (bods like me and a few cynical ultra rich who can live entirely off capital for a few years) that its not something they worry about too much.

Can someone please explain the point made upthread about it being silly to not take the student loan in addition to the tuition fee loan?

clean machine The point is that the larger the total loan you take out is, the greater the chances of you never actually having to pay it all off.

The proportion of your salary that you pay each month won't be any higher for a larger loan but you've a much higher chance of reaching 30 years from graduation without having paid it all so having the rest written off.

Exactly How!

It's the all or nothing concept that's new to me.

a few cynical ultra rich who can live entirely off capital
Surely "household income" for the purposes of calculating student loans is not confined to earnings? It must include income from capital as well as well as other incomes such as pensions? DH is retired and has no earnings, I'm pretty sure his pension and income from capital was declared when DS applied.

Secret
If one has a regular income not under your control then its not an option.
But if you control your income stream - eg business owner shifts all earnings into different tax years, its an option.

If you put £1 million into savings one year then your earnings next year could just be the interest on it it, while drawing down the capital.

It is not how most salaried people operate but it is valid.

cleanmachine
Its a real nightmare
BUT
so few families have the cash available to clear the loans its not something most worry about

and hopefully those who do have that kind of money will have a natter with their accountants about how best to manage the situation.

As I said earlier, Inheritance Tax is a much bigger headache than getting, or not getting, a larger loan by manipulating income. Most company owners just cannot extract a huge amount of money one year and nothing the next because they often don't have large sums in the bank! That is why most directors take a salary and partners take regular drawings. Trying to take more out of a business than it can normally stand, is a pretty quick way to ruin a business because you normally need the money to pay the staff and bills! On a monthly basis!

But with decent planing IHT is largely avoidable. If you are looking at an IHT bill of over £50k its worth paying somebody to mitigate it.
And as the best methods involve passing the money onto those who will use the money in a shorter time frame, its good for the country.

Millibrain is banging on about the tuition fee cut again today as if its a good thing for most people.
I hope they see through him.

Has he yet bee specific about where the shortfall is coming from?

Ha Ha
He's got Ed Ballsup as his finance bod.

And before you think I'm partial, Gideon silver spoon in every orifice and Cameroon wifey's an Astor so I'm all right don't know either and don't care!

I'll go and have a think while swimming

As for avoiding inheritance tax, the problems are that you don't know when you're gonna die.

Also, I don't know if others feel the same, but I have real concerns about passing over large sums of money/property/investments to my DC when they're too young to handle it and have done nothing for it.

But that might just be me!

You can do degrees in the Netherlands in pretty much any subject entirely in English with no tuition fees and just a one hour flight from most UK airports.

This is not really true. The Netherlands has launched a number of undergraduate liberal arts and sciences programmes in English but regular bachelors courses are still predominantly in Dutch. The new programmes vary considerably in quality (I wouldn't touch most with a bargepole).

In STEM Holland is very strong in research and in practice this means that education takes a very low priority for STEM departments, with the teaching being carried out by low tier researchers rather than professors (who use their research grants to buy themselves out of teaching). There is no equivalent of the quality curriculum control that happens in the UK, either. Universities such as Amsterdam, Delft and Leiden appear in lists of the top world universities based on their research but their teaching is often very poor. BTW student accommodation in cities like Amsterdam is very very difficult to find and very expensive, as a lot of Dutch students live with their families.

Overall I would advocate looking very carefully at what is on offer before studying in other EU countries. Bear in mind also that degrees from these countries are not necessarily attractive to the big UK graduate employers.