Parents funding all uni fees

[ImagoLuna]

Can those of you who have funded/intend to fund your DCs through uni, so they don't need to take out loans, tell me if you have any regrets in this decision? What's the range of total annual costs (cheapest to most expensive) for students - tuition fees/accommodation and maintenance for different unis? How did you manage this financially?

I have friends telling me I'm stupid even to think about this and that DCs should take out student loans which they'll 'never have to pay back' - but given our DCs presumably aspire to earnings above the limit to pay back loans, surely many of them will be paying back loans for many years to come?

I'd rather my DCs leave uni debt free but this will have a significant impact on my own life and my future finances too. A price worth paying - or an unnecessary burden?

blaake
The amount borrowed does not affect the repayments.

e.g Student loan £27000
If they earn under £25k they repay nothing.
Earn £26K and they repay £90 a year.

Student loan £54000
If they earn under £25k they repay nothing.
Earn £26K and they repay £90 a year.

So exactly the same.

Again this is all very helpful, so many thanks. I can see both sides of the argument: on the one hand, there's no guarantee that they'll be high earners and so may never pay back much of the loan....on the other hand, they aspire to earn good salaries like most of their cousins (perhaps going into law or city based careers) and despite the Martin Lewis description, it's still a debt, that they then potentially pay back plus interest.

I kind of expect that if they graduate with good degrees from good unis, then they ought to aspire to earn well above the national average - otherwise in a way, what's the point in spending 3 + years at uni - but who knows what will happen of course?

I personally find it hard to accept the concept of paying more than the actual borrowed amount, through interest - in any context of borrowing and have never been comfortable with this. I've always been of the mindset that you only purchase what you can afford and never live on any kind of credit or loan, if possible.

I have this image of myself living extremely frugally whilst their at uni and beyond but that image doesn't work if I become ill. But then I do worry what if one of them drops out of uni and I've paid the fees etc up front and can't get those back if they then return to uni.

DH and I fundamentally oppose a graduate tax (if people earn more they pay more anyway!) so we are planning to pay for ours to go.
Whether that happens in reality is yet to be seen (DH was a super-high earner, but unfortunately has become progressively more I'll over the past three years, curtailing the amount of time he works significantly), though we have several more years (eldest is 11) before we need to make any firm decisions on this. As DH is from an EU country, there is also the possibility of studying abroad on the cards, and thus it be a moot point in any case.

Also- they may well decide to do apprenticeship and not need fees, so we'll see.

imago don't worry about the cousins - we are in a very similar position! No way could we afford to pay fees and DD is funding herself having worked since 16 and saved. She has nearly finished first year, is extremely proud of herself (as I am!) and not the slightest bit resentful. You sound like a lovely mum, I hope it works out for you :)

Before you go overboard with "it's immoral to take money from the taxpayers if you won't be earning enough to pay it back", perhaps you should remember that some of your children's lecturers will almost certainly be in this position.

This is due to increasing casualisation of the workforce. Some universities run up to 50% of their teaching on temporary or zero hour contracts. And even those with permanent contracts are often kept on part-time contracts while given a workload that is impossible to do in less than a full-time week.

And not the young ones, either: I'm 54 and working a full-time week on 15.000 a year because my employer chooses to regard it as part-time. (My VC, in the meantime, earns 24 times as much as me and has an expense account, while I have to pay for teaching material and conference trips myself).

And just for the record, I never leave a student's email unanswered or refuse to sit and talk, sometimes for hours, to a student who is upset or worried, I always do my marking on time, have never cancelled a lecture, publish with prestigious publishers and journals, and am regarded as a bit of an authority in my field. All of which takes time. Fortunately, I am too old to be in debt for student fees, but the ones who are setting out in the job now are not- and their contracts look no better than mine.

Immoral perhaps, maybe we should all take the moral high ground and leave our jobs out of consideration for the taxpayer- but your children would not be getting that university education.

As you can imagine, the dilemma of whether I should pay my children's fees or not is not one that takes up a lot of my time or mental energy.

Sorry, OP, for hijack.

Paying their rent and a down payment on rent when they leave uni is much more useful than the fees themselves ( from a recent grad)

Halls in London £6k? More like £10k!
People who think the loan doesn’t matter that much - what about the whopping 6% compound interest?

I’m £65k in student debt btw ... I don’t feel it. I get charged £36 a month and just count it as part of my tax. All of my mates have student debt too so it’s the new normal. None of us feel like we ‘have debt’ because if we don’t have enough money to pay them they can’t send Bayliffs round or anything.

I don’t even notice it tbh

House deposit would be a million times more useful ... exponentially so

@healthyheart @FakeMews I know how a student loan works, but I don't see how the way it is paid back is an issue. Being proportional to income means that if my children are in a lower income bracket they would still be able to afford the repayments, as they would if they were high earners. There's a lot of hysteria about student loans.

And @FakeMews it’s under £21k not 25. And it’s done monthly ... so if they earn over 21k/12 in a month then they pay that month.

Lemony Yes but it's £25k from April and will increase in line with earnings. So for future students like the OPs DC it seemed simpler to quote the new rate.

We paid for my DD. She was the first year of the 9K fees and she got a highly paid graduate job at the end of it. It was the right decision to pay her fees as her monthly payments would be high but at the same time her remaining loan would be accruing at 6.1% interest. She is managing to put money aside towards a deposit.

Having said that, if paying fees will be a struggle for the OP, then you should not impoverish yourself to do so.

If you can afford to give your children that amount of money it would be better spent as a deposit on a house. They can get a student loan to pay fees and use your money as a house deposit - but they can't do it the other way round, i.e. spend your money on fees and borrow a house deposit. The amount they lose in paying interest on a student loan will be far less than they would lose in paying rent or interest on a mortgage.

A few posters recommending buy to let. I lived in a friend’s parents buy-to-let with her and 3 others as a student. It was frequently miserable for her (chasing up your friend who can’t pay rent that month) and she ended up losing multiple friends over it. She made a load of money, but left uni without her social network. In my final year my parents did the same (as my brother was heading to same city for uni) and I also found it really stressful being my friend’s landlady. The friendship didn’t survive.
It can go well, of course, but I don’t think it’s an easy answer.

With my DD we paid all her costs but allowed her to get the tuition loans. She is two years on from graduating, has worked a bit and then done a postgraduate course for a year so has paid student loan contributions then had them refunded at the end of the tax year. The same will happen this year again.

I must admit i do think of them like a tax as the amount paid back is a proportion of earnings and does not impact her borrowing ability. I do think the rate of interest is disgusting though and the goalpost changing doubly so

I did think of paying the tuition fee loans for her but in the end erred against it as you can't foretell the future and many things could have happened resulting in her never earning enough to start paying it back let alone complete doing so.

When she is in a position to buy I will assist her with a house deposit and consider that a better use of the cash for now. If there is more money available later to pay off the student loan, great we can do that then

We helped our DS out at uni, but believe me it will break you financially to fund them completely and then whilst you are working your fingers to the bone and breaking yourself financially, they will be swanning about most of the time, going out, eating crap and drinking too much. It will break your heart to see them taking advantage of your over generosity. It will not kill them to be in debt after uni, they will be earning a good wage to pay their loan back as will 75% of the population in 5 years time. They won’t appreciate your sacrifices and won’t learn anything if you do this. I am not bitter, honest😂😂😂

Do you think you might limit their choices by offering to pay upfront?

It's not just the fees, it's the living costs too. If one or the other went to an expensive city, you could be looking at £10k+ for these. Even in cheaper university areas, you would be looking at probably £4.5k just on accommodation (10 months rent, plus deposit, plus agency fees), and halls are often more expensive than this.

Would you expect them to live in cheaper, more affordable accommodation, maybe missing out on halls? Would you need them to partly self fund through a part time job? What if one or the other couldn't find one? What if one wants to do a placement year or year abroad?

Why not ask your daughters what they want? They may well prefer to take the loans out and have you top up a little bit so they can live comfortably at uni without too much financial stress?

Can anyone tell me if tuition fee loans can be paid back early and is there any cost to this?

It strikes me that I could get the DCs to take out loans just for the tuition fees and then I pay their accommodation and living costs.

Then, in the first few years after they leave uni. I could pay back their student tuition loans, thus spreading the costs for me across say about 2 or 3 years. They'd then still be debt free pretty quickly but I also wouldn't be struggling so much myself, financially, for the 3 years they're at uni.

Also, good point LadyLance about perhaps limiting their choices if I try to pay all their costs. I especially want them to have a good choice of accommodation whilst at uni. as I think where and how they live will have a significant effect on their happiness at uni.

I also wonder whether at least one of them may do a fourth year of study like a law conversion course perhaps. Again, it would be easier for me to spread the costs in the undergraduate years.

Another factor is that one of them may be more likely than the other to persist with their degree as she is much much less decisive, less clear about what she wants and less organised. I worry she may falter at uni and (although I hope not) even drop out/ want to change course etc. I need to consider this when making a decision re. financial support. If a student does drop out, do you lose the entire year of tuition fees and accommodation costs?

I hate to tell you, op, but well paid city jobs don’t grow on trees. DD1 is a self employed barrister and makes very good money but rents in London are stellar unless you want a long commute. The hours worked are also stellar and although salaries are good, the cost of living is also high.

I find it an interesting concept that the highly paid shouldn’t make a graduate contribution to their education. Why not? Why should it be the lower paid such as care workers, teaching assistants, fork lift truck operatives or a zero hours contractors who have to pay it through standard taxation? This would now have to be raised if we didn’t tax our graduates.

If your children land city jobs in law or finance, be grateful. Just getting a good degree isn’t enough for these jobs. There is more to it than that.

I wouldn't pay for my dc's university fees upfront, it makes them different to the others. I can often tell which students have had their fees paid upfront (I'm a lecturer).

If the rest of your family weren't well off enough to pay their children's costs in full would you be considering this? If not why are you effectively letting your family decide for you, this putting you into an old age of poverty?

The vast majority of students, regardless of background, have fee and maintenance loans.

To answer your question, yes, if a student drops out you lose the fee and accommodation you have paid for.

If they decide to be stay at home parents, or only work part time, or work in a low paid occupation (teaching for example) they could have no loan liability. But if you pay upfront you don't get that money back. That's why it's only a sensible option for the wealthy.

Which you aren't. Seriously don't do it unless you win the lottery.

A while back on that money show it said this wasn't really a good idea in the present system. Some students won't ever pay the loan back completely so why pay upfront.

I’ve got a student loan, albeit a lot less than people have to take out these days, and I literally never think about it. About £40 a month comes out of my wages, but I just see it as a graduate tax and it’s totally affordable. My DHs parents funded him through uni as they didn’t want him to have ‘debt’ but it’s not really like a debt at all, they would have been better putting the money aside for a deposit on a house for him. I hope to pay mine back as I feel it’s my civic duty to do so but it’s not something that looms over me.

Do you have a financial advisor? If you’ve never even had a credit card it may be worth speaking to someone more knowledgeable before making any big decisions.