Is it true that it's never worth paying uni fees up front?

[SummeryNights]

DD who is just turning 18 inherited some money which she doesn't have full control of until she turns 21. She wants to fund her university fees with it, and part of her livings costs, so that she won't have to take out any loans.
She has a meeting with investment professional trustee very soon. At last chat he advised not to do so, as if she doesn't end up earning a good salary for a significant amount of years, such as by becoming a SAHM, she would never have to pay the loans back anyway. She felt undermined by this (and thought it was sexist) and pushed back; he said to discuss it once she has university offers (she does now) and a career plan for after graduation (not specifically, apart from that she wants a fulfilling one and always to work hard, as she does now). Ultimately she could pay off the loan in her 3rd year when she turns 21, but that will cost her thousands of pounds in interest payments.

My instinct is that ultimately it's her money and her reasoning is sensible, so to back her up. But the trustee said it's never worth paying uni fees up front and all home students take the loan. ("Even the children of millionaires.") DD's research leads her to think this isn't true, but I can't find much information on that. Any ideas, anyone?

If she will still have a house deposit after paying the university fee, then I think it would be nice to pay the fee without borrowing the loan. It does has the interest build up, she certainly will need to pay back all the loan with the interest even if she get a medium income job. And debt do cause a bit stress on people.No matter how you tell DC to treat it as a graduate tax, when they receive their monthly statement, watching the balance going up,it does cause stress to some people.

I wouldn't pay it up front, no chance!! Who's to say she might suddenly change her career path and become a teacher, earning £35k a year max and paying £100 student loan a month? Then the loan will be wiped out before she's paid it off!!

Thanks everyone. Lots of food for thought. The trustee, at the very least, was wrong that everyone takes the loans as there are a fair few here who don't.
I think my instinct to back up DD on this one is probably right.

Speaking as someone who has been to uni and has a high paying job, the loan for the fees was something I took advantage of. I’m currently paying back the loans. I honestly don’t notice it coming off my pay. I’d have much preferred to have been in a position to not have to worry about living costs etc and if I’d had the money, I would have bought a place to live for the 4 years I was at uni.
Take the maintenance loans and the tuition loans!
As for getting a job in law after graduating, unless you have a family connection in a firm, it’s going to be VERY difficult to get a training contract. Even if you get a job in admin or a job as a paralegal with a firm that offers training contracts, you can still get side swiped after spending a year jumping through hoops and interviewing for the training contract by someone who doesn’t work there and has a family member on the board.

This probably doesn't apply in your DDs case, OP, but if it's at all likely they'll want to do a postgrad degree which isn't funded, and there might be money to pay one or the other but not both, then I believe it's reckoned to be better to take the UG loan rather than the PG loan.

Ifs, buts, maybes and crystal balls!

Most people who get jobs in law do not get it through family connections.

The trustees are wrong that everyone takes the loan. In fact my son said quite a few of the parents of his friends have paid instead - often people used to paying £18k a year school fees so student fees/maintenance costs not too different so we just continue the pain for another 2 years.

The other circumstance it pays to pay the fees up front is if you are older parents of low numbers of children - eg had them in your 40s and you are now approaching 60 - and particularly if there is a family likelihood of both dying early of an inherited disease , and with sufficient estate that will incur a considerable amount falling within the bracket to incur inheritance tax. It is then cheaper to gift the fees to pay the child's university, and save the child(ren) 40% inheritance tax on that amount when you die at a later date. Grandparents can do this too, but need to bear in mind the gift allowance as they'll be more likely to die within 7 years.

If your DD wants to be a barrister, she will need to take account of the hugely expensive bar course and living costs while she does it, unpaid work if she needs it to get a good pupillage and then delays in payment.

One of the most common reasons for people leaving the bar is the fact that payments for work done can be hugely delayed so you're living on fumes (or partner/parents) for the first couple of years.

kingsassassin is totally correct. DD is a barrister and I do know how arduous this can be.

First of all, Oxford Law is a great start and statistically gives her a decent chance of being a barrister. However she needs to be aware (and so do you) that this usually means self employment. There is the employed bar (CPS) but she should expect to be self employed.

If she wants the criminal bar, she won’t be a high earner for years!!! Also the bar course is currently £20,000. Plus living expenses. However there are scholarships from the Inns of Court that can help with this but her money might be better used for making up any shortfall.

Lastly, where is she intending to practice? If you live at home and commute, then great. If you need to live somewhere away from parents, expect high prices in London. Also if she has to travel to courts, living within travel distance of stations costs! Or her working days might be 15 hours every day!

Pupillage awards vary greatly. Some are £20k and some are £70k. £20k means you need financial back up. Oxbridge grads should do better than the lowest but sometimes when a barrister is “on their feet” the money can be slow to appear in their account. You need a financial buffer.

You need to weigh up housing (rent or purchase and where), possible earnings based on what area of law (and she might have to review this as she goes along) and any possible career breaks before she decides. If she’s using every penny for university costs, it might not be a great decision. There is also time needed for Masters or volunteering etc to enhance cv.

For very high earners, it is worth paying up front. But only in that situation and I have actually talked to Martin Lewis about it on a radio show!!!

Surely depends how much money she has?
If she has inherited £200k, then maybe makes sense to pay upfront, as she'll still have money in the bank for property etc after graduation.
If she has inherited only £40k or so, then no - take the loan.

Well of course your are getting many response ever from people who have paid upfront because Mumsnet skews towards people who send their children to private school and can afford the university fees upfront.

( nothing wrong with that before someone attacks me)

However in the general public most people in university are taking the maintenance loan so the advisor is right.

About your concerns about the terms changing.
Yes it is a possibility. However considering about 50% of teens now go to uni then if the loan company were to make the terms unfavourable it’s would have massive terrible affects on the enotire economy. If the terms because really bad it would easily cause a recession because if the amount of people who have student loans. While nothing is certain, I don’t think you need to fret too much about terms changing.

Also agree with @wineymummy. If she’ll still have a lot left over after paying upfront then I would agree with paying upfront however if it’s just enough to cover the tuition and her maintenance while at uni then I would not.

A relative of mine took the loans and did a law degree at a RG Uni. After they graduated and had their first job it took years for them to get a pupillage - they undertook other jobs and voluntary legal work in the interim and completed bar exams. The 1st 6mths of the pupillage was unpaid. After 12 mths they then had to see if they had secured a place within those chambers. Now nearly 29 they have only just started to earn as a barrister and income is slow at the start. They estimate it will be another 5 years before they have financial accounts to support a mortgage application - by which time they'll be 34! High pay doesn't just happen after completing bar exams! I'd hang on to the money and take the loans if I was your DD.

Take the loan. If she graduates and gets a pupillage and looks to be earning money then even taking the interest into account the amount of house her inheritance can help buy probably far exceeds the amount she'd gain by not having any repayments to make.

Add on the fact that however invincible she feels now, she hasn't even started, let alone graduated, let alone become a barrister. Anything can happen along the way and having a chunk of cash behind her is hugely beneficial if things don't go according to plan.

Martin Lewis has always said that unless parents (or those funding) are millionaires and literally won’t miss the money, take the loans. He gives very good advice!

Thanks for all the further advice (and on law careers too)

Early days as a barrister are very precarious and many fear it is a path only practical to those with financial back up. If she was planning to go into magic circle commercial soliciting (so to speak) it might be a trickier decision but as a barrister, I'd keep the liquidity

Op, we were in the same position when DS was applying to uni 4yrs ago.

Both DC had a large inheritance which they took control of at 18. DS was in Yr 13 when he got his, but we only briefly considered him using it for fees/expenses. He is currently in his final year after 2 yrs studying and a year out working. He is hoping to work in the niche industry that he did his year out in, which does have relatively high salaries, but a job is not guaranteed.

Our main thought was, as others have said, he is better using it to buy a house, rather than spending years saving for a deposit. He also has enough to do both, but he will be able to get a much lower mortgage if he doesn’t use it on fees. Ok, mortgage rates are lower than loan rates at present, but that could change. I bought my first house in the days of 14/15% rates.

There are so many stories of how young people struggle saving up house deposits, that we felt it was there already for him, so why not keep it and, hopefully, allow it to grow. We have been mortgage free for a while, and it is a lovely place to be, so if ours can achieve similar, that is great.

Both are drip feeding their money into a number of funds across a S&S ISA and a LISA, so also benefitting from 1k a year from Govt. on the latter.

We could have paid his fees ourselves, but as we weren’t sure if DD would go (no plans at moment, she working and travelling) then it didn’t feel right. Instead, we are paying something towards their monthly ISA allowance so their inheritance will stretch even further.

DS in particular has also enjoyed taking over the reins of his investments and has started to invest money in some individual shares. Hopefully his long term gains will at least match the interest of his loans.

Yes, just epends on how much money there is and what (where the money is the student's ) they decide they would prefer to do. Without a doubt my London lawyer daughters (solicitors) so earning well on qualification, were better off without loans. Some barristers (and solicitors) take a while to earn good money or never do of course as people say above although if they get a good pupillage after bar school they tend to do fine. (Bar school fees are being reduced to about £11k I think by the way from much higher because the Bar Council I think it was has announced its bew course at that leve so the other providers have massively cut their fees as a result).

I think there are quite a few of us lawyers on MN.

@SummeryNights

Could be worth your DD having a read through the House of Commons Library Research paper on Student Loans published last month researchbriefings.parliament.uk/ResearchBriefing/Summary/SN01079#fullreport The take up stats there would I suggest possibly be more accurate than the sample size on this thread. :)

What about using the cash to as a deposit for a property in the town where she intends to study? That way the money contributes to her education (albeit in a different way), her uni costs will be less as her friends will pay the mortgage by renting a room off her and she would benefit from a property investment for the future.

What about using the cash to as a deposit for a property in the town where she intends to study? That way the money contributes to her education (albeit in a different way), her uni costs will be less as her friends will pay the mortgage by renting a room off her

Might be a good plan elsewhere but oxbridge they're likely to be in college accommodation most or all of the time.

Nah. Don't pay upfront. Thats mad.

My Nephew has an Oxford degree and is a management consultant working abroad. He paid off his student debt within 6 years of graduating. He now owns a house and has investment capital for his own business. He is very rich. Makes no difference that he had earning potential.

Better to keep the cash and have the student debt which can be defered if all does not work out. If all goes well she will end up paying it back easily and quickly. If things don't work out for any reason - ill-health, not sticking at the course, changing course, she still will have the cash to use for other things. And if ultimately she wants to have a deposit for a home or buy into a barristers chambers as partners have to do, she will have some back up. Check Martin Lewis - and don't get snobby about the Oxbridge factor it applies to all students not only those with less earning potential. She's not special - good financial advice applies to everyone.