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?

OP - haven't read the full thread, so others may have made these points.

Considered this, but decide against it because:

1. We have been paying school fees for a long time, & actually we need the cash to be freed up to pay off our own mortgage, which will benefit everyone in the long run.
2. If we are in a financial position to help the DC pay off their loans in the future, then we will do so.
3. If they can't 'afford' the debt, they won't have to pay it - no-one knows what will happen in future, they may not be able to work/may choose to be penniless artists.
4. There is a lot of pressure on the government to reform the whole student loan system; there is a chance if there is a future change of government that loans may be written off or restructured in some way.
5. Even with DS taking out all the loans he is entitled to (full tuition fees and means-tested maintenance loan) there is still a shortfall, so we are funding him £5k a year anyway - for a 4 year course.

HTH.

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

I've just paid mine off in full OP, about 4 years after leaving uni so defiantly earlier. There is no penalty for this, and I was able to do it thanks to my parents who also paid for my fees at the tie, so essentially exactly what you are thinking of doing.

They weren't intending to pay of my loan - the thought was they would pay for my course and accommodation and I would pay for my living expenses bar bill but they came into some money so it made sense to pay it early as I would end up paying it anyway.

I do think it's worth weighing up if you kids will ever have to pay it back, as otherwise it is just wasted money and you would be better off helping them with a house deposit. I "only" had £20K of debt and would have paid if off in a non-city job (project manager in london) where I earned c£25-35 in my first few years of leaving uni. If we're only talking maintenance loans and they are likely to earn £25k+ then they will have to pay it back. If we're talking maintenance + fees or accom OR they will earn less than that then it's unlikely they'll ever have to repay it.

All that said, even once they are repaying it's only about £100 a month on a £30k salary (though there's might be different - unsure on interest rates of their loans as different post 2012) so a housing deposit would be vastly more useful as they could get on the housing marker early and pay their loan back gradually, rather than the other way around.

My ds is due to go to university this October and we will pay. He is looking at a career in finance as a chartered accountant and therefore the loan would need to be repaid. The interest rate is high and paying upfront is the better option in this scenario. Other factors - we can afford it, we have no debts/mortgages/loans, pensions sorted, we can afford to help with a house deposit later if required.

DerelictWreck it's only about £100 a month on a £30k salary Under the new rules from April that would be only £37.50 a month.

OP please don't make a decision like this based on comments on the internet from people who are seriously wealthy.
I would suggest you invest in the cost of consulting a financial adviser. It might save you making an expensive mistake.
I've never even had a credit card
All the more reason to get professional advice.

He is looking at a career in finance as a chartered accountant and therefore the loan would need to be repaid

Shanghai I assume by this you mean that you'd expect his salary to be high enough that he'd be likely to repay the loan in full, rather than being required to be debt-free in order to become a chartered accountant? Because the latter certainly isn't the case.

We're looking at buying a house when dd starts uni in whatever town. She gets free rent, rent the other rooms out to cover the mortgage and we have a house we can sell at the end.

Titchy,
Poor phrasing on my part - I would expect the loan to be repaid in full due to high salary.

Ah ok!

Next year I expect to have 3 DCs at uni. I can't imagine current students' loans ever being written off in the future by a government.

I've toyed with paying fees upfront but have decided DCs will take out tuition fee loans instead. For living expenses, I pay hall fees, DCs live off minimum maintenance loan.

I think the other thing to consider about tuition loans vs payment upfront is the financial independence & sense of responsibility your DC will have.

I think they will be more inclined to work harder (& choose their course carefully) if they know they are funding it themselves - and will want to make the most of it.

That seems to be the main difference between today's students, and when I was at Uni in the 80s and our fees weren't only paid but we got grants as well.

It's really helpful to hear people's opinions and gives me a lot to think about. It's not really about whether or not my DCs can have the same advantages as their cousins, although that plays a part.

It's more about my own dissatisfaction with the idea of them (or me) ever borrowing money or having debt. I'd really like their starting point to be debt free but having considered what people here are saying, it may be that a compromise is the best I can do and pay some of the costs but not all.

FakeMews, I don't think I need formal financial advice but thanks for suggesting this. I've lived without the need for credit all my life, except briefly getting a mortgage which I managed to pay off sometime ago. I've also managed 2 sets of school fees single handedly since DTs were 4 and have always lived well within my means and taught the DTs to do so too.

However, there is that possibility that their attitude to studying may be affected by everything still being funded by me. One of them is very keen to get a job in any case and determined to be as independent as possible and not rely on me. The other has always been happier to accept what I offer but is fairly reasonable and would understand if I need to get them to take out loans.

I have lots to consider and still another year and a bit to go before I make a final decision. I do wonder whether there'll be any changes to the student loan system in that time.

I do wonder whether there'll be any changes to the student loan system in that time.

Assuming they're year 12 not a chance. Maybe some tweaks (interest rate, re-introduction of non-repayable grant) for 20/21 entrants.

My DD's attitude to studying is influenced by her paying for herself. There is a big drinking culture at uni and a lot of her fellow students have an expensive lifestyle which includes drinking , clubbing, takeaways, drinking.....Each to their own but I wouldn't fund it!

It is really only worth paying your child's fees yourself if either a) you earn a fortune and have paid up as much as you can in pension contributions and are wondering what to do with the spare cash OR b) you are older parents and have sufficient assets such that if you were to die before your child could pay off the loan & a large % your estate would be lost in inheritance tax, it is better that you reduce your capital by the fees as it would only be lost in inheritance tax.

If I could afford it I would pay the fees. I would prefer ds to leave uni debt-free and not have a massive extra tax which affects his ability to borrow money for a mortgage etc.

A student loan won’t affect your ability to get a mortgage (which is one of the reasons it’s often called a graduate tax as it doesn’t hang round your neck like a conventional debt)

but it does, because it will be taken into account on affordability

quartermooninatencenttown, I half agree with you. However DDs experience is that many of the big spenders have loans, overdrafts and are still receiving big top ups from parents. We pay for DD, but neither she nor we want her to have more money than other students. University is a chance for her, and others, to mix with people from different backgrounds. Having more money that others would lead her to be labelled.

Absolutely agree needmoresleep! This year has been a real learning curve

We funded the BA and are now doing the same for the MA. We are not funding a PhD, that's down to ds.

For us, it was a combination of not liking the ts&cs of the loan; any monies paid for Higher Education don't get considered as gifts for IHT purposes, so ds is effectively getting some of his inheritance early without falling foul of the gifting and surviving seven years rules; dh earning a good salary, and his employer (abroad) offering help with education as part of the package.

If ds comes out with debt, then it will be on his overdraft, but no huge sums owing. He already has a fair amount towards a house deposit from an earlier inheritance.

For the BA the fees were £9k pa; the rent is years 2 and 3 was about £366 oer month, and we pay him an allowance as well. The MA fees are £7k, less a 10% alumni discount, but the hall fees for postgrad accommodation are huge...about £8k. Ds still gets his allowance, but only in term time, as he doesn't need to pay for food etc when he's home, and as we are abroad, I give him some euros whilst he is here anyway.

Titcjy Assuming they're year 12 not a chance You wish - the not so small change for ds was the rise in fees from £3-£9k. True, we knew in 2010 that the fees would rise, but the final confirmation wasn't til later. The govt can sell of the loan book, change the Ts&Cs anytime they want. I wouldn't take a loan like that as an adult, and as we could afford to do it for ds, we paid.

For us the timing worked with dh retiring for good after ds is through his education, and being able to help ds was why dh took his current job.

Ariela Precisely, better to let ds have part of his inheritance early and avoid IHT, and the interest on the loans. We are a combination of the latter part of (a) but with public sector pensions, and (b) in that we are both in our 50s.

There's another bloody an HE review underway scaryteacher - the outcome of which won't be known until Spring 2019, too late contractually for 19/20 starters.

Put the money into your pension pot. More tax efficient. LISA with govt bonus.
You can always take it out at 55 and give it to the dc.
But if you accept a mortgage debt your dc can accept a student loan.
It is silly to make your pension years dire.

Don't sacrifice yourself.
If you cant afford to pay easily don't do.it.dc should take our a Loan like the majority.

If they going to.be super high earners then it wont be hard on them to repay as they will have high earnings. You can't rely on them paying you back by financially supporting you in your old age...

Extinct I think they will be more inclined to work harder (& choose their course carefully) if they know they are funding it themselves - and will want to make the most of it. Disagree, I'm afraid - ds got a First last year and has had a couple of distinctions for the MA work this year. He says us paying means he can concentrate on the academics as opposed to worrying where the next can of beans is coming from.

Titchy That doesn't mean that things can't be altered retrospectively!

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

No, don't do that. As someone wrote out for you upthread, the amount a graduate pays every month is dependent on their earnings / income, not the size of the loan.

So, if their debt is £28 000 (just fees) the monthly repayment won't be any lower than if their debt is £50 000 (fees + maintenance loan). It would be daft.

You have to stop thinking of it as a loan, and think of it as a tax. TOdays graduates never see that money in their bank, the £40 odd quid is just part of the deductions before it hits their bank.

Tax is FAR lower than it was when I graduated back in the 80s when there were no direct fees. the graduate tax (student loan) should be thought of as just paying a slightly higher tax than those who haven't been to university.
If ever they work PT / become ill / take parental leave / stop earning while they travel / stop earning while they set up their own business / earn a lower wage for a while for ANY reason, the repayments stop. Unlike any other loan you could take out.
If you want to save for them, give it them towards first deposit or a car or car insurance or wedding or travel or whatever.
Only makes sense to pay if you are really rolling in it and won't miss it every year. (not not even then unless you are seriously rich and will also be able to bankroll deposits etc.)

That doesn't mean that things can't be altered retrospectively!

Actually it does....