How much financial support do you give your DCs at uni?

[Tigerblue]

Just thinking ahead here, but just wondered how much financial support others give their children at uni? We have a friend who pays for DD's accommodation but not sure we could ever stretch that far. We've saved a bit here and there, but I'm now thinking we seriously need to start saving more as DD will be going in two years time.

Does anyone know what the interest rate is on a student loan?

And is it standardised, or can you shop around for a better deal?

I posted up thread Grumpy. This year's students loans are already accruing interest at 4.6%. It's fixed at 3% plus RPI.

Yeah, me too really Saffron, was having a moment of weakness!

OP - we fund the lot from fees to the mobile phone contract, so no loans. I pay about £365 in rent per month, allowance £500 per month (but not in holidays when ds is home), £9k fees.

I take ds back to the UK for uni and pick him up at the beginning and end of each term.

We are fortunate in that dh's employer gives help with education until age 24, so we get some of the cost defrayed.

The other advantage is that there are no IHT implications with supporting someone in full time education, so he is in effect getting some of his inheritance early!

dd has a maximum loan and knows she needs to find a part time job.
we are on a low income, however we are on a sticky wicket, if we earn more we are expected to give more to dd, so there is the catch. no point earning more unless it is a substantial amount more and dh is close to retirement, so not feasible anyway.

she knows this, i pay her mobile
we both worry about finances.
my dm has offered to give her a small amount for travel to and from uni to halls.
i put the deposit for halls on my credit card but am really worried about next year, when she wont be in halls.

Is it just the tuition loan that is written off after 30 years or the maintenance loan too?

DD has about 25k in a bank acc from inheritance, savings etc. With 4.6% interest on loans, I will strongly be advising her to use this money rather than run up debts. She might be more careful with the money too, knowing it is from her bank acc and not the bank of mum and dad.

Olympic fan I really wouldn't do that , the whole loan inc maintenance is written off .The repayments are fixed at a percentage of salary so if she never gets a highly paid job she might never pay anything , likewise if she became ill or unable to work. How sad if she had use d her inheritance on something she might never have had to pay for .That money could give her financial security.

Olympicfan I agree totally with pp. As Martin says, see it as a future tax on income rather than as a debt. I know it goes totally against the grain to have loans plus interest but it is not a typical loan. None of us know what is around the corner and no crystal ball. But much better to keep the lump sum towards say a deposit on their first house, etc than to pay fees, etc up front now where it is lost forever. If earnings don't reach a certain level (currently around £21k pa) they don't pay the loan off ( again think of it as a tax on earnings rather than a loan! Without sounding sexist, also build potential maternity time in and possibly returning to work on reduced/part time earnings. If our DC pays the amounts off now they can never get this back!

Olympicfan - very much second what pp said, please dont advise her to use her lump sum on fees. She will take years to build that money back up from the money 'saved' each month, not paying the loan repayments.

Surely it is best for her to pay the monthly replayments (yes it does include interest but as others said, its more a tax than a normal loan) and be able to afford to buy a house much earlier, using her nest egg as a deposit.

My DC recently got an inheritence, my DD is still only 16 so my DH and I are in process of becoming trustees of her money, in place of solicitors. The solictitor seemed to take it for granted she would use it for uni, but 'No chance' was my silent response!! We are lucky in that we can help them but even if not, I still wouldn't advise them NOT to take loans. The money will help buy a house much earlier and be less dependent on landlords and renting, which I feel is a better use of it than paying uni fees upfront.

DS just started uni, his inheritence came at 18, he could if he wanted blow it all as it is in his name in various accounts. However, we have discussed at length, since we knew about the money 18mths ago, how, if they invested for long term, they would have a decent house deposit after uni. I am hoping all our talking has sunk in, I think it has.

I wouldn't touch a student loan with a barge pole, given that changes can be made to the Ts&Cs at the whim of HMG. Just look at some of the Erudio threads about loans that have been sold off for collection. I didn't want ds saddled with loans, when we can afford to get him through loan free. Neither of us had them for our initial degrees, though I had an old style one for my PGCE, so it's paying it forward for ds.

I agree with scaryteacher - I am very, very wary of student loans and think parents should think very carefully indeed before allowing their DC to take one out.

Decisions depend a lot on individual preference for money now versus money later. Students hoping to take up moderately paid jobs in London on graduation should be very careful. A starting salary might welll be enough to trigger loan repayments but not enough to provide a reasonable standard of living. The idea that you go to University on a loan because you may never earn enough to pay it back, calls into question why you are going to University in the first place. (Because when it comes down to it a decision on tertiary educaiton, whether by the state or an individual, is an investment decision.)

For every quote from Martin Lewis there seems to be an opposing one from Peter Hargreaves. I can't find the lastest which suggests given current interest rates, remortgaging would be a better deal than borrowing from the Student Loan Company, but here is an earlier one:

"This leads us on to Hargreaves’ new project to set up a foundation to help under-privileged students go to university. Currently he is working with local schools in Bristol and is sponsoring two students. The aim is eventually to help hundreds of young people get a higher education without racking up massive debts.
He said: ‘I think these student loans teach people that borrowing money is good.
‘But borrowing money, whether it be a person a government or a business, is bad.’

For those of you who have DC going to university next year and are taking out a loan, if you have to top up consider whether you can afford to pay some of your earnings this financial year into your pension. The DC loan is calculated on previous years income after pension. I put some of my savings into my pension ( before 31March) as it wasn't making much in interest anyway and my contribution decreased as a result. hope that makes sense? It is worth fiddling around with the gov.uk student loan calculator to see what difference it makes.
Ina even two DC at university and I think they make an allowance of £1100 of your income for having extra dependent. I top them both up to max loan even though one is in London and the other has a bursary, I think it is fair that they get what a lot of their fellow students are on. I have topped up with food and I paid their halls deposit and kept their phone contract going as both under £10 pm

4.6% is outrageous when the base rate is 0.25%.

And we are paying mortgage interest at 2.99% fixed rate which I thought was high.

There's obviously a lot to take into account ... DS will read Maths and should hopefully get a fairly high-paying job when he graduates (well, that's the plan...) so is likely to be making loan repayments pretty quickly.

Having DD not at home has reduced the family bills by around £75 a week
so I am sending that money up to her

I know MN can be a bit of a parallel universe but back in the real world, most families do not have the level of savings or income to fund tuition fees for their dcs. If you do, that's great (and I can understand that it can be affordable if you are used to paying private school fees). But surely you aware that most families don't have that sort of money?

Decor, maybe you haven't read the whole thread but these comments and the subsequent discussion were in response to an OP who does have that option. This thread has also discussed how the level of support dc get depends greatly on family income and situation.

Decorate, but that was not the question. An alternative question is whether student loans at 4.6% is the cheapest form of borrowing.

For some it will be, including those who are never likely to be in a position to repay, but not everyone.

The OP (who hasn't come back) was asking about helping to pay for living expenses. Most parents will help as much as they can afford with that element. Tuition fees are a whole different ball game.

So what? That was discussed and I hope was helpful to the OP. Others have made comments and raised questions and the topic has shifted a little - that is the nature of conversation. A subsequent post raised the question of paying tuition fees if one were in a position to do so and that has also been discussed.

This year I'm not helping DD at all

She has a bursary for food (£25 a week), accommodation & uniform, her grandma gives her £10 a week and she worked all summer to add a further £10 a week to her spending money

We lost her tax credits and child benefit when she went away to college (about £720 every 4 weeks, down to £360 WTC which we lost when I lost my job) so I don't know what we would be able to afford tbh & her course isn't eligible for loans

"Most parents will help as much as they can afford with that element. Tuition fees are a whole different ball game."

I cannot see why fees are a whole different ball game. It is all an investment decision and the first part is whether the cost is likely to be worth it. Which is why it is so important that would be students really research and ensure they get on the best course for them.

The decisions are then how the cost is funded. Some people will have more options than others, and as I said above, this is not always income related. There is a real question about whether student loans are the best form of funding the fees given the high interest rates.

Other parts of the equation include the student seeking to earn during either holidays or term time, and keeping costs as low as possible. If saving on en suites, running a car, or frequent coffees out (and some MN DC seem to assume thase as essentials) mean a student can avoid taking out a full loan, they really ought to consider it. Ditto I cannot see why parents should be trying to fund a standard of living for the student that they cannot afford for themselves.

I agree with much of your last paragraph Need, about some MNers having strange ideas about what a student "needs" to be spending each week (it's the same on the pocket money threads), but the option to look for cheaper accommodation is just no longer there at many universities.

My ds is in his final year, and didn't have an en-suite when in halls. Looking round lots of places with my dd this year, that choice has been removed from a lot of halls. Universities have contracted out the halls of residence. New owners are making them a lot 'posher', but then charging a lot more too. Many places just don't have affordable halls any more.

The 'investment' and 'interest rates' argument is irrelevant if you just don't have the money. It's also excluding the fact that this is completely mis-named as a 'loan' in that many people will never pay it back. You have to think of it as a 'tax' on graduates, which, for all those times of your life you are not earning over £21K, you won't be paying anything on.

Decor We could have told ds to get a loan for fees, and paid the living expenses, but we can cover the fees as well. I see no point in him paying interest and having a loan when he doesn't have to. It doesn't affect our standard of living, we have everything we need, and most of the things we want, so why not invest in ds? He is an only and is going to get the lot anyway, unless we have a major falling out, so he is getting it now, rather than later.

And that is absolutely fine for you to make that decision. But scaremongering about student loans is not helpful to the majority whose dc can only attend uni if they take one out.