Has anyone here paid uni fees upfront, or considering doing so?

[dyllemma]

I know and understand all the Martin Lewis arguments for not paying upfront. For the majority of people those arguments will absolutely hold true, but I'm thinking that for a sizeable minority, paying upfront might be the right thing to do if:

1. they have the money to do so (obviously);
2. they think its fairly likely that their DC will be a consistently high earner after graduating (e.g. perhaps they're heading into a high earning profession, live in the south-east where wages are higher, and are reasonably likely to be the main breadwinner for whatever family they might have in the future, rather than go part-time or take a career break - none of which can be predicted with 100% certainty, but individual families can make a judgement call as to the likelihood for their own DCs).
3. they aren't at all confident that the alternative option of investing the money will grow the pot faster than RPI + 3%, especially when RPI is on an upwards trajectory due to geopolitical events.

I'm interested to hear from people who have decided to pay the fees, or are thinking of doing so (if so, what is your rationale?).

My DC will start Uni in Oct 22, so I'm considering the options. I think the decision might have been easier a year ago, but with inflation going the way it is, I'm less sure.

We have paid fees and living costs for our DC as we are in a position to do so and we want them to start their working lives debt free. They are likely to get jobs paying over £28000.

We looked at the Martin Lewis advice, but we felt it did not factor in the psychological burden of debt. Nor did it factor in things like potential inheritance tax bills going forward if we had saved the money.

This is interesting - I would be keen to know if anybody actually feels the loan is not worth it in some situations ? Especially if the course will lead to a careers with salaries over the threshold (eg medicine/law/ etc ) .... with RPI expected to be so high surely it is not worth it if guardians can afford to support them.... Martin Lewis seems
To imply everybody should be taking the loan no matter what?
Interested in if anyone actively chose not to take the student finance

Yep the terms of loan are all going to change to ensure a much higher percentage pay the loans back in full or near enough.
I'm sure the Gov never envisaged there would be this level of unpaid loans when they set it up!
The Martin Lewis argument will become outdated. Prospective students and their parents need to be given accurate up to date advice on which to base their decision making

The new student finance regime (from 2023) will probably reduce the 'do we, don't we' dilemma articulated on this thread. The current regime means the interest obligation starts to accumulate aggressively right from Year 1.

Under the new regime, the capital and interest accumulation is at a more reasonable level in the earlier years, giving scope for the student to repay themselves (if an 'early high earner') or with family help. It allows options to be kept open rather than having to make a calculation at the outset.

However, as others say, in most cases students will be paying more for longer and, rightly or wrongly, that is the whole point of the reform. It brings the system closer in line with the longstanding Australian equivalent, where the 'inflation only' interest rate simply means the debt obligation remains constant in 'real' (ie spending power) terms.

The insidious aspect is actually the continued pegging of the debt obligation to RPI and not CPI as a measure of inflation. The Office of National Statistics acknowledged that RPI cumulatively overstates inflation and it is being phased out where it costs money for the Government (eg benefit upratings) but cynically kept in place where it does not (eg student debt).

*Martin Lewis seems to imply everybody should be taking the loan no matter what?"

Only on the assumption that:
a) Nobody knows whether their child might end up in a low paid job, with little prospect of wage rises, working part time, or on sabbatical/long term sick leave for significant stretches of time.
b) You can invest the money somewhere where it grows faster than rpi + inflation, and use it to pay off the debt when you have more certainty.

The second point is a reasonable bet historically, but I suspect it is much less certain in these times of geopolitical uncertainty, high inflation, and ever tightening regulation/taxation of the rental property market.

If RPI=1.5% + 3% = 4.5%

I worked out that if the loan is for fees which are 27,750 for a 3 year course, then if you don't pay anything off the loan will have doubled after 15 years.
Obviously if RPI is higher then this doubling will happen much sooner.

@FrydianSlip

If RPI=1.5% + 3% = 4.5%

I worked out that if the loan is for fees which are 27,750 for a 3 year course, then if you don't pay anything off the loan will have doubled after 15 years.
Obviously if RPI is higher then this doubling will happen much sooner.

It may have doubled in today's money, but to be fair you do also have to take the inflation into account when judging what that would feel like in 15 years time..Martin Lewis has a good calculator on his site which shows what the debt will be in real terms. It's worth checking and playing with the assumptions though.

For full disclosure my parents paid my fees - but I also chose to stay at home and got about 3.5k in grants/bursaries so I really did leave debt free.

I think if you can choose to pay fees AND support young people with other things (like housing deposits or cars) where there isn’t other support available, then fine. But if you can’t do both, save your support for other things.

@dyllemma we have paid upfront for the same reasons you have outlined in your OP. Time will tell if that's the right decision

We have paid what we can with a view to taking out a small loan in the 3-4th year if needed. The later and less you take it out the better surely. You might not need the full amount in y1. So delay as long as possible as interest starts building from day1.

This gov is very likely to put it up and change the terms again.

Dd and I were having a conversation about student finance today and I had not even realised the pending changes . So to be clear - for those who enter uni prior to 2023 do the old rules apply in entirety or do the new rules apply for any year of their course for which they obtain finance from 2023?

Beginning to think I was a fool for not encouraging her toward a Scottish uni for which she would have paid no tuition fees.

@Maggiethecat

Dd and I were having a conversation about student finance today and I had not even realised the pending changes . So to be clear - for those who enter uni prior to 2023 do the old rules apply in entirety or do the new rules apply for any year of their course for which they obtain finance from 2023?

Beginning to think I was a fool for not encouraging her toward a Scottish uni for which she would have paid no tuition fees.

The changes have NOT been backdated and will apply to those taking out new loans for the first time in 23/4.

I've noticed Martin Lewis hasn't yet updated his calculator for 2022 student finance I wonder if/when he will do that and whether the default assumptions will change. It currently assumes average wages will rise by 1% year on year. But whether they do or not is irrelevant if the threshold for starting repayments is no longer going to rise in line with average wages.

Also, I was wrong earlier when I said his advice was to invest the money instead - I re-read his site and also remembered that he doesn't "do" investment. He suggests simply putting the money into a cash isa or savings account until you know for sure that your child will get a well paid job after uni. This is absolutely 100% guaranteed to lose money, but he seems to think its worth taking the hit unless you can absolutely 100% guarantee that your child will be a high earner. I don't think that's a very good balance of risks to be honest, especially when inflation is high.

Geez! Wonder how many people reconsidering a gap year?

Dd2 starts 2024 and I need to have a think about this seriously.

Thanks OP for flagging it- think may consider not taking full loan for her.

@Maggiethecat

Geez! Wonder how many people reconsidering a gap year?

Dd2 starts 2024 and I need to have a think about this seriously.

Thanks OP for flagging it- think may consider not taking full loan for her.

You do realise that 'you' don't take out the loan(s)? - the university applicant does this for themselves and is responsible for the repayments. You can tell your DD that you don't want her to avail herself of this facility, but at least in terms of the maintenance loan, there is nothing to stop her taking your money and applying for the non-means tested part of the loan anyway.

(Unless you actually do mean that you would need to borrow money yourself - from elsewhere - in order to pay your DD's fees / maintenance?).

@bracebrace

If we can we will pay. Fees are a noose. I also think Martin Lewis is wrong for the majority of middle class families. I wouldn't encourage my child to uni if they were only planning on earning (in today's money) sub £30k.

Also plenty of professional women have children and remain higher rate taxpayers for the whole of their working life. I have 5 children and have paid higher rate tax every year since 2004 (when I was about 26). Including the 5 full years I took as maternity leave. My peers are all similar (not 5 children!!). I'm not a high flyer in the city either just a standard professional job in the provinces. Loans would have been a terrible choice for me.

Exactly. If you can afford it I think just pay it. I’m not sure why anyone is encouraging their child to go to Uni if they don’t think they will earn more than 27k most of their working life. I’m not a high flier but am a higher rate tax payer and I paid my student loan back many years ago (obviously it was much lower as I was the last year to get a student grant so only borrowed 5k!). Most graduate salaries start above 27k. The girl we spoke to on Warwick offer holder day is going into a 39k graduate starting salary. That’s what I am hoping my son will be doing. 27k isn’t much money at all where I am (London & South East) so perhaps those who don’t think their children will earn less are up north. Even so I still think most graduates would aim to earn more than 27k

From the opening paragraphs of the gov page about loans:

"The regulations may change from time to time, which means the terms of your loan may also change"

Never assume that the terms at the start of your loan will be in place throughout. These recently announced changes will affect those in specified years. But that does not mean there cannot be changes for others, any and all

We did on the basis that the kids need the money now and in their early working lives, not when we are dead as we are very healthy and have long lived relatives do a good chance they wouldn’t inherit until they will be (hopefully?!!!!!) in their 60s…And by then inheritance tax will be very onerous.

GP have given our DS £30k each and they will use it for tuition fees. DH is an accountant and pored over many scenarios numerically to come to that decision.
We are lucky in that we can afford to give them a lump sum towards their first house when the time comes.
Being boys too, rightly or wrongly swayed our decision. Much less likely statistically to become a SAHP or go pt in the future.

www.savethestudent.org/student-jobs/whats-the-expected-salary-for-your-degree.html

The average graduate starting salary in the U.K. is £24k.

Average starting salary is a bit misleading as some will be in cafe jobs etc for a year or two. The average at 5 years after graduation would be more useful I think.

We paid all fees and living expenses for our DDs when they were at uni and they are immensely grateful they have no debt. Both would have to be paying something now on their current wages.

@Newgirls

Average starting salary is a bit misleading as some will be in cafe jobs etc for a year or two. The average at 5 years after graduation would be more useful I think.

Yes agreed, I've always thought that would be a far better statistic.
Also some jobs have a low starting salary compared to the actual earning potential eg medicine

@Parker231

www.savethestudent.org/student-jobs/whats-the-expected-salary-for-your-degree.html

The average graduate starting salary in the U.K. is £24k.

They vary massively across the uk. Individual families can take a reasonable view on what their DC's starting salary is likely to be in the area where they live, and bearing in mind their relative employability. If they are academically average, live in an average location (do they exist?), study for a degree that isn't specifically sought after by the labour market and have no specific aspirations then they are more likely to start on an average salary than someone who lives in SE England, has high academic achievement, doing a degree that is considered to be highly sought after by employers.

Yes, some will drop out, become ill, or worse, and their life course may change so they never earn enough to pay the loan back, and then people might kick themselves for spending the money, but for Martin Lewis to suggest that nobody should pay upfront unless they are 100% certain those things won't happen is just daft.

I can definitely understand the logic if you are confident in your DC's ability and they are doing a degree which is likely to lead to a high earning career (engineering, medicine, dentistry etc