Paying for university living expenses

[Inamuddle36]

Hi — I assumed there would be a thread in this topic but I can’t find one.
All going well, our son will start university in the autumn. We are debating between applying for a loan and self-funding his living costs (room, food, books, social life.) We have no idea what is a reasonable amount of money per month (or per term). Excluding housing (which can vary a lot from city to city), can anyone tell me what is a normal amount for a University student to spend on food, social life, etc? If you self-find, do you give your child a fixed amount per month or a lump sum at the start of term or do you top-up as needed (as long as expenses are reasonable)? I would be grateful for guidance!
(Obviously, I know many people don’t have the option to self-find — but I hope everyone with children at university could offer some insight into typical costs.)

We pay ds' rent £130 (Sheffield) in halls. He had to the minimum loan to budget for his weekly spend. He spends around £25 per week on groceries, £10 on takeaway food and £0 on books (it's all online, mum). He has upgraded his computer (computing degre) paid for a few driving lessons and train tickets home. He doesn't really drink/go clubbing.

The recommendation is to look at the full loan and for parents to pay the difference between the minimum and full. That could equate to £300-£400 pm if they receive minimum loan

We couldn't have afforded to pay for everything, hence my Ds took the minimum loan, I have another going in September and the youngest in two years. I think my DDs may well end up being more expensive

@HewasH2O

The MN approach is that students take out a loan for their fees and a maintenance loan. Their parents (if they are lucky enough to have the resources) top the maintenance loan up to the max, often by paying rent on behalf of their DC.

Ok thanks that's helpful. So there are 2 different types of loan. Apologies I have done no research so should know this.

@CloudPop

So reading these, is the general approach that parents pay the fees and then loans are used for living expenses?

No, I think that would be incredibly unusual.

The fees element (£9250 pa) isn't seen by the student (or parents).
The loan for the fees goes direct to the University.

The maintenance part of the loan (haven't got the exact amount at my fingertips but is also around the £9k mark) is what the student has to pay for rent, bills, food, travel, and everything else. If parents income is above about £25K then parents are expected to contribute up to 1/2 of that amount on a sliding scale, so lots and lots of parents are contributing £4'5K (in round figures) so their student has the 'expected' income. Students from lower income families get is all in the form of a loan.

Commonly, the cost of rent (which usually includes bills in halls which is what most first years stay in) is a little over the amount of the min loan, so many parents either choose to pay the rent themselves (equivalent to their contribution) and let the student keep the min loan for living expenses, or the student pays the rent with their loan each term and usually a top up from parents needed and then the parent hands over the 'living money' usually monthly or weekly as that suits both their own income but also makes it easier for students to budget.

Very wealthy parents might pay all expenses, including fees, but Very few parents would pay fees and then take out a maintenance loan I wouldn't have thought.

Thanks @Kite22 very helpful and again, apologies for my lack of personal research prior to commenting on the thread

My DDs were both eligible for almost the maximum maintenance loan - I'm a single parent on an average wage, their dad is no longer alive. I give them a fixed sum each month to top them up because I can afford it and I want them to focus on the academics. DD2 is disabled so would struggle to hold down the standard uni type job (but is considering tutoring because she enjoys it).

It's different for everyone.

Ok thanks that's helpful. So there are 2 different types of loan. Apologies I have done no research so should know this.

This table half way down this page gives you an idea of how the sliding scale works according to parental income

www.savethestudent.org/student-finance/maintenance-loans.html

You're very welcome CloudPop , and no need to apologise at all.

Can’t believe I said maintenance “grant” in my earlier post, it’s a maintenance “loan”, obviously! Was probably thinking back to my own youth when grants were much more widely available.

Most students take the fees loan and the maintenance loan. For those with families with not much money they receive a lot more for maintenance loan than everyone else and the parent pays nothing. For many MN parents the child only receives the much lower minimum maintenance loan and the parent makes up the difference to the full maintenance loan which the less well off receive so that is a cost to the parent of about £4500 a year.

There is not much point as a parent in paying the fees or the just the maintenance and taking loan for fees because of the way you repay what you borrowed at 9% of salary (of the student once working) over the threshold so it does not work like a normal loan.

Very few parents did what I do - no loans at all (as for me and the 20% of parents whose children are at fee paying school in sixth form that cost is basically the same as school fees so you are just continuing what you were doing/paying out for the extra 3 years is how i saw it). However plenty of parents who were paying school fees think at 18 the child should take on its own debt and are happy with the loan system.

@xenia

There is not much point as a parent in paying the fees or the just the maintenance and taking loan for fees because of the way you repay what you borrowed at 9% of salary (of the student once working) over the threshold so it does not work like a normal loan.

That depends on earnings expectations for the next 30 years. If you borrow more, then you'll be paying off your loan for a longer period of time. Obviously, it doesn't matter if you're never going to earn enough to make enough payments to pay it off. But if you're going to earn £50k or more for most of those years, then you could be looking at the difference between paying it all off after 20 years or paying the full 30 years, which could be a huge amount of money (mostly interest). It only "doesn't matter" if you're not going to earn much and the repayments will never cover the amount borrowed, let alone interest.

True. If you are on say £120k a year you might be repaying £8k a year of you £50k debt but if the debt is half that then £4k a year etc.

@Xenia

True. If you are on say £120k a year you might be repaying £8k a year of you £50k debt but if the debt is half that then £4k a year etc.

On £120k of income, repayments are £8-£9k per year, the debt will be repaid in 7 years and interest charged would have been £10k, so total repaid £60k.

On half that income, i.e. £60k, the repayments are £3k-£5k per year, the debt will be repaid in 20 years and interest charged would have been £39k, so total repaid £89k.

Earn £40k, you never pay it all off, the repayments are £1k-£5k per year, totalling £80k, so still £30k more than you borrowed but you still owe £74k at the end due to the interest added yearly!

That shows the effect of interest. £29k more interest and repayments lasting for 13 years for someone earning "only" £60k compared with someone earning £120k.

Hence why it really hits the "middle" earners, i.e. those on, say, £50k plus a lot more than the lower earners or the higher earners.

(All calculations assuming inflationary increases in wages of 2.5% per year without any changes in repayment thresholds).

A little update: my DD has just received her student loan confirmation letter for this coming academic year. It now says on it both what she'll be getting (minimum maintenance loan) and what the max loan would be. Progress!

However, it doesn't tie it to the parents. The letter says, "To learn more about living costs during study, how we calculate your funding and how you can make up the difference, go to where you'll also find further links to guidance about budgeting." (sic) There should obviously be a URL between "to" and "where".. but there isn't.

Her loan will almost exactly pay for her rent (she deliberately chose the cheapest room that the uni offers) and we will top up to the max loan level.

That is useful for parents, that it now says so.

www.mumsnet.com/Talk/am_i_being_unreasonable/4506046-In-this-scenario-does-it-make-sense-to-pay-uni-fees-upfront
not sure if you saw this thread @Inamuddle36, but it's interesting to read how many people pay what portion and on the last page is a good chart showing how much money a graduate can expect to pay back over the years if they take out the available loans.

My DSes both got/are getting the maximum loans. They were also eligible for a uni bursary. They had fairly basic shared bathroom accommodation and both had pretty frugal lifestyles. It was plenty. DS1 also worked each summer, DS3 has found finding work trickier through Covid but DS3 had hardly any chance to spend his loan beyond hall fees and food so had money left over for the summer.

DS1 is being stung for repayments as he’s earning well but will still probably take the 30 years to pay his off, so lots of interest.

After a lot of debate we decided not to take the loan and to pay in full. DC is in London. We pay the rent on halls and £500 a month plus phone. The first month they went a bit mad attending parties etc to meet people and ran out of money. A firm talking to alongside the bail out and its not happened again. They tutor to earn a bit of extra cash.

I know that we are lucky to be able to afford this.

What on earth do you do if you can’t afford to top up the minimum loan to the full amount/ pay your child’s rent? The loan amount is decided via a very blunt calculation that doesn’t take account of fixed outgoings/ other dependants. My daughter is a young carer - there don’t seem to be any bursaries to help with this at most unis.

In theory the blunt calculation works as those families with not much money get so much more maintenance loan. I agree that families differ eg I have 5 children and had 3 at university at one time if you count post grad and even with the youngest I have twins so they have been there at the same time and some families have high rents to pay at home and some not and some have big mortgages and others have paid off their mortgage as they had their children in their late 30s etc

For the person earlier saying the child spent all the money in the first week or two that is one reason I started my weekly payments for my children who do not have loans in July when they left school so they had 3 months to save up for the more expensive first few weeks at university and also one reason I pay them weekly as they never run out of money. However that does not teach budgeting so not everyone would agree with that.

This is the current academic year's maintenance loan thresholds I believe;

This is pretty shocking info isn’t it. And I guess with the new system, more will be in the category of paying for longer and therefore paying big interest, although I know the way interest is calculated is going down.

The difficulty is that if you pay the fees/maintenance loan upfront to avoid the interest, then many people won’t be able to help with a house purchase later.

Is it better to have the loan with it’s likely big interest, but a parent can give £30-50k house deposit….or is it better to have no deposit given and not be facing the interest on the student loans?? Let’s assume for the sake of argument that we are talking about someone who gets a grad job but not a top paid one….so earning £30k early on and around £50k by 10 years in. I realise lots will earn more and less than this.

Any thoughts?

Mine uses the loan for rent. Then works for living expenses.

We pay for top ups eg books, Xmas/birthdays, travel, sometimes a supermarket delivery and when visiting stock up on toiletries.

We provided household stuff like bedsheets and kitchen equipment.

GP pays for phone.

for me the priority was ensuring the chidlren graduatd debt freee ie I paid for their education as that was what my parents did for us so it felt more important than property. Luckily I was also able to help with a first property. My son's friend's mother has just had her 25% pension lump sum and very very kindly of her has just paid off her son's student loan entirely.

I think it depends what a child is likely to earn as to whether it is worth not having or paying off the loan. The useful calculations done above illustrate the issues and the rules can change too and there are different kinds of student loans over the years asd well. Eg my daughter's fees were £1k a year brought in by Tony Blair (not the £9250 a year of today). My older son's were £3k and the twins £9250 (and even higher for their law post grad)