Student loans - anyone changed their view recently?

[jeanne16]

Following the recent furore over student loans, has anyone changed their view about whether to try to fund their DCs university via a route other than a student loan?

The US does have a well set up scholarship system. It doesn't help all, but it is good for some. There seem to be very few scholarships here.

stonecircle I think you are reading something into my comments that isn't there. I wouldn't touch the loans with a bargepole; having been through the system myself for my PGCE (and I didn't start paying interest until the April after I'd passed the course). Other people would turn up their nose at my second hand car, not going on holiday twice a year, and not having SKY/ a massive flatscreen TV/ a smartphone etc, so we all have things that we perceive others as being 'scathing' about.

I do think that a lot of those who want to go to uni should think long and hard about it, as I would argue that not everyone who applies and gets in is capable at that point of doing a degree. Out of the sixth formers I taught I wouldn't have classed 50% of capable of going and getting a respectable degree. Some of those shouldn't even have been doing A levels imo.

The IHT point is that I was told that monies used to fund ds trough uni would have to be treated as a gift and included in any IHT calculations. Having checked, that isn't the case. I bet lots of people are sitting on considerable property wealth in the SE (not in my part of the UK though) and might find that useful information. It's another thing to consider.

My dh is retired from his original career, but an opportunity offered that meant we could get ds through uni without loans; we would have been fools not to grab it. The mortgage is still there, but will soon be gone, and we can return to the UK with dh retired, and ds through uni without loans. My db could have funded his eldest, but chose not to, but helped with rent, so different choices for different people.

If I were offered a loan on the terms of the SLC from a bank, I wouldn't touch it, as the goalposts can change at the whim of politicians. If it were a mortgage style loan, without compound interest, and you knew what the repayments would be, then that would be different. I am wary that parts of the loan book have been sold off, and I do wonder if the write off at 30 years plus will continue.

Had ds gone to uni when the fees were £3k, I wouldn't have been as worried, as we would have saved and paid them when he left. His fees were £9k, so we effectively didn't pay the mortgage off early as we had hoped.

I'm going to have to talk to dh about this again. Our mortgage is close to being paid off, but I'm worried that remortgaging will take us beyond retirement age.

I think an appointment with a financial advisor would be a good idea, but the last time we did that, we ended up with an endowment mortgage :(

Stone Circle - I have said on either this thread or similar one , no-one is stupid for taking out the loan. The reason I said it is that Ds was speaking to a visiting student from the US who thought that the loan system was good , in that , no large amount of money needed up front. HIs opinion, and only one young US chap - was that the UK (by which I mean probably English - in that I do not understand the Scottish system enough, nor indeed the Welsh) was far better and more egalitarian than the US system. Happy to be contradicted.

Big scholarships aside I would add.

I agree. A commercial loan for post grad costs 9% interest. Student loans are 6%.

If I were Ohyoubad, I would look at whether my child were likely to earn reasonable amounts - if the teenager going to go into lucrative work or is she wanting to devote her life as a volunteer for Oxfam, has she always said she will stop work when babies come etc etc.. .So form a judgment on whether that child is likely to have a lot of repayments to make of the loan. Then decide if you think helpijng children is a good thing - I know loads of rich people who made their own way up in life and know that it is when you take personal responsibility you tend to do better. I accept that my handing university on a plate to my children psychologically may not be right. I am able to afford it and take that chance but I do it out of income , not loans. Then look at your own income levels. I was very pleased after 30 years to become mortgage free and I've decided not to take any more loans again ever. I don't think I'd borrow now at my age (50s) to fund university for a teenager.

However if you can find say the £9250 fees a year (some people go back to full time work to fund it for example) and the child can live at home or else get a job to fund rent (my just left school son's 3 nights a week new Deliveroo job by the way would probably cover most university rent if he kept it up every week) then it would certainly be easier and much cheaper for the child to be given that 9250 a year perhaps on the basis they must work enough to fund their rent (you would probably feed and house them in university holidays free). If you have a lot of children that becomes a very different sum and in my view they should all be treated equally - one reason I am funding the twins' 9250s when their siblings were 1k and 3k for fees.

There's another perspective here (sorry haven't read whole thread).
www.ucu.org.uk/article/8882/Graduates-face-mid-life-tax-crisis-because-of-student-debt

I wish we hadn't taken out the full student debt for our DD.

Corbyn was definitely on to something. No wonder students are pissed off. And the SLC are developing a reputation for hounding students who go overseas for more than 3 months (for the next 30 years of their working life ....)

Yes and some people (for whom no one will of course be sorry) who earn over £100k in that tax band where you lose the single personal allowance entirely and are probably of an age i law firms when you rae paying £24k a year per child in childcare and in London with a £500k+ mortgage you will have your 62% marginal tax rate plus the 9% graduate tax - taking you up to over 70% on your highest marginal earnings and then add on your half of the child care costs and you might have not a lot left once tax and childcare is taken account of at least on those upper earnings.

My children are both aiming at careers where they will almost certainly pay off the student loan so I am minimising their debts. If your child is doing a degree where their income is unlikely to rise above 21k then I'd wonder why exactly they're doing a degree.

Have skimmed thread ....
plan to let kids max out student loans and use my cash to pay their house deposits
but then I'm an accountant not a lawyer

Parents shoudl not worry about it. It's the children's lives not their own and most parents can't or choose not to pay and that's fine.

I have been lucky enough to be able to help with student fees and house deposits. I wouldn't say that is because I am a lawyer not an accountant as we earn similarly across both professions but it is certainly a question of risk - if my twins earn as little as their older brother currently does then I am a fool to fund them at university. If they earn what their lawyer sisters do then it makes huge sense I fund them.

If your child is doing a degree where their income is unlikely to rise above 21k then I'd wonder why exactly they're doing a degree.

How on earth do many people know that at 18?

You can make a guess from the degree title and the quality of the university. A maths based degree is likely to give you a well paid job especially at a reputable university, where as doing media studies at somewhere with low entry requirements is just a way of accumulating debt and whiling away the time.

And what about all those students who fall between your two extreme examples? How do you forecast their earning power?

You could apply a kind of psychological and choice matrix to it - ask what career they want to do (some already know eg my sons have a potential architect in their class who is off to read that at university, another is a medic etc etc one of mine has said he may do law later; then look at what most of the people who work in the family do as children do rather boringly do what parents do - my father and brother - psychiatrists etc. Some families have an ethos of good works and very low pay or are not at all ambitious or that child isn't and take it from there. I don't think it's that hard. Look at the school - plenty seem to be really unambitious for children. Lots of teenagers end up doing what their parents do. Even with benefits you get some families where generationally no one ever ges off state benefits. Or families where most are likely to be a teacher (nothing wrong with that - we need them and my mother was one and some become super heads on a lot of money but on the whole they won't then be that well paid). Some families the women tend to work part time or not at all. My sons have a friend who has strong views that women should stay home for the first 5 years and ideally after that be a housewife (good luck to him finding a wife although the men in that family earn up to about £1m so I bet a good few women might adore that meal ticket to a life of wealth)..... etc etc

OFGS - Lucy are you seriously suggesting that an 18 year old's prospects - and therefore whether they should go to university- should be based on what their families do and school friends are likely to do?! The vast majority of 18 year olds (certainly from my experience of having had 3 of them and talking to lots of their friends) don't know what they want to do. Or if they think they do at 18 they may well change their minds further down track.

And, even using your method there will still be thousands of students who don't fit your test criteria. Not everyone wants to be an architect or a lawyer you know.

Lucy is advocating for a system where people should not have aspirations and should not try and move beyond their 'class'. Know they place!

University should inspire young people to be better than they thought they could be, to expose them to new views and things they didn't consider possible. No family member should be trying to thwart that.

I'm not advocating for unlimited university placements, an 18 year old should be able to choose other meaningful ways into employment. It should be about the best route for their aspirations rather than limiting potential in the future.

No, someone asked above about how you decide whether to fund the child or not (although as we all know the vast majority of parents have no chance of paying the fees for the teenager so this issue is totally irrelevant to most people). You assess that based on various factors.

Those of us who could fund and have not or could fund and have done will have done that. I chose to pay. I am taking the risk they might never earn much. I suppose you could choose to pay to save the state money and then will be presented with the Jeremy Corbyn medal for relieving the state of costs I suppose and get a champagne reception ... not...

Lucy - it was me who asked. But it was a rhetorical question asked with incredulity when 2rebecca suggested that low potential earners shouldn't go to university. It really wasn't a serious question because it's impossible to assess what most people are likely to end up earning!

Fine for those budding medics/lawyers/architects- but not for the majority!

I have never used my degree - it was certainly not in accountancy.

But I went to Uni in the days of 5% of kids going - more than 4/5 of whom had been at private school
and we all got maintenance grants and free tuition
and housing benefit in the holidays

times have changed beyond recognition

both of my children agree with the principle of Student Loans, but not the level
and they and I think that Universities should bear some of the repayment risk

Talk, I didn't get a maintenance grant or rather only £50 a year and the full one was £900. If your parents didn't make it up that was that. Thankfully may parents did (and also I didn't have fees to pay on top but then hardly anyone went at all so it wasn't as if there was massive generosity to everyone)

In fact in the post war years before my time suddenly loads of people frmo the working classes could go. my father who had not been able to do medicine first time because his father was 70 by then and could not afford to pay for him on a long degree could then do a second degree (medicine) as there were post WWII grants for the poor.

I didn't get a maintenance grant or rather only £50 a year and the full one was £900
Your parents must have been loaded then as mine were pretty well off and I got a lot more than that as a proportion

The US does have a well set up scholarship system. It doesn't help all, but it is good for some. There seem to be very few scholarships here.

Compared to the US, the UK is still in a very good place.

Sure, there are some scholarships in the US but few cover everything and US student loans come with commercial interest rates/terms. You don't get a pass on paying back the loan because of low income or being a stay at home parent.

And the fees at top US universities are eye watering in comparison with those at top UK universities.

For those of you complaining about the UK system - be grateful that students can still go to any UK university without paying anything beyond contributions to maintenance up front. This looks increasingly unlikely to survive the next decade post Brexit - many working in university management anticipate Oxbridge privatising and competing directly against top US institutions. Other top UK universities will then follow.

Talk, I studied economics rather than accountancy so more concerned about the utility of money than focussing on the numbers themselves.

So, no holiday this summer, no plans to replace our 10 year old car, and an assumption that I will work through to my mid 60s.

For me it's worth it to have DC leave University debt free.

I suspect there is a bit of a London element here. It is so expensive that we have never had the chance to get used to the sort of standard of living that people elsewhere seem to take for granted. If DC stay in London their salaries will be higher and so they would repay, but equally it will be vital that they start off debt free and able to take on a maximum mortgage.

I accept that others don't have the choice of working later, or don't earn enough. But since I can, I think it would be remiss of me to expect the taxpayer to subsidise members of my family. The same taxpayer has plenty of calls on their resources and my family is not a priority.

User, the range of fees for Masters degrees is evidence for your prediction, at least if you look at top economics courses.

Seriously ouch!

DS hopes to go on and take a PhD, so no career loan. Hence our summer staycation!