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.

If we are still in a position to pay then we will. We pay private school fees so it will be a continuation of that with some on top. Both children probably want to go into their uncles company where they need a masters degree at entry level, with their wage structure they would definitely be paying everything back.

@RandomThought96

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 our situation and view also.

We have spare cash and guessed our kids would be high earners. Which so far they are.

My kids absolutely love the fact they came out of uni debt free. They also had pastime jobs and lived reasonably frugally

This may explain the effective split between Londoners etc, and those from elsewhere. £24k is not a high salary in London. £24k average lifetime earnings for a graduate career in London would be low. Plus when you start, and indeed as you gain a mortgage and family responsibilities, you often need every penny despite living frugally. Hence, without looking into NPVs and RPIs it seemed important that DC should start their working lives with a clean slate. As public sector workers ourselves we wanted them to be able to choose lower paid employment in their home town if that is where their vocation lies.

@MarchingFrogs -
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?).

Very loose word choice - know that she would apply for the loan but we still consider it "our" debt iyswim.

We'll likely help her with tuition fees, whether by her taking none/part loan or by giving her money at some point in the future to pay off any loan taken.

I am paying upfront out of saved money since birth for child plus a bit of current monthly income I am saving now to pay for year 3. I also understand all the arguments for not doing so and understand why others do not pay.
I’m paying as I got my uni fees for free so a bit of payback for that ( balancing between the generations) and as I hope my child is an above average Warner and to free her from having to ever contact or deal with the student loans company ever in her life. I think of it as a gift to child for the next 30 years! They will never need to consider a 9% deduction when taking overtime, accepting a higher paid job, in fact not think about student fees at all for their whole working life. Even if my child is not a high earner I am still happy to pay it and all those things still apply.

@sashagabadon - what you describe is something that ML has not factored into his calculations.

I do quite like the idea of dc not having to concern themselves with loan repayments if they are ever straddling the threshold or just generally when considering employment options.

On the other hand I would like them to have regard for the financial cost/value of their education.

We could pay for tuition but with some arrangement for them to make payments to us when they start earning- something we'd probably put aside for their benefit anyway.

Has anyone considered/done this?

Yes I agree Maggie. ML makes no calculation as to the absolute headache dealing with SLC seems to be and how the extra tax could act as a disincentive from working more, earning more etc and there is a cost to that too.
My child obviously knows I am paying, I only told her just before we would have needed to apply and there is no sign she is not grateful or taking her studies seriously in fact I would say the opposite ( she is first year). She is very grateful in fact and realises she is lucky. She hasn’t told anyone friends etc . I don’t mention it either other than to ask her to send me the invoices when she gets sent them by the uni nor have any conditions attached and neither will I in the future. Her life is still up to her.

Paying fees aside, more parents should be encouraging their children to look at degree apprenticeships and school leave programmes. A degree without the debt!

@Roses1221

Paying fees aside, more parents should be encouraging their children to look at degree apprenticeships and school leave programmes. A degree without the debt!

Completely agree!

Roses1221
Paying fees aside, more parents should be encouraging their children to look at degree apprenticeships and school leave programmes. A degree without the debt!

Completely agree!

So they already have X10 the applicants per post - how’s that going to help?

@Roses1221

Paying fees aside, more parents should be encouraging their children to look at degree apprenticeships and school leave programmes. A degree without the debt!

The reason more go to uni compared to our parents time is apprenticeships are like gold dust.

ds has applied for and has offers for uni, but is keeping an eye out for an apprenticeship. If he landed one he would take it instead.

I will pay dd and dsd fees, both aiming for medicine, currently paying nearly a year's uni fees per term each girl for school fees

If they do a further degree and take out another loan, they have to repay them concurrently- so 18% of income over the threshold. That’s a heavy burden

If you can afford to pay the fees and give a decent house deposit, then great.

For loads of people though, it’s an either/or situation. Parents might muster £50-60k and can then choose to give it for fees or for a deposit. This is where the key decision making comes in.

So, assume no student debt because the fees have been covered. Great, the mid 20s student starts their graduate job and isn’t paying student loans. Their salary rises a bit. Perhaps they are saving £100-200 per month by not having the student debt. Yes, they’d an save that towards a hosue, but given high rent in the south east they might only be saving a couple of hundred or a little more per month. How long will it be until they can buy? Will they reach their 30s and be wanting kids and still not be on the property ladder? It’s quite likely,e can as fairly well laid graduates who don’t have to fund student loans. So they stay in rented much longer. By the time they buy they only get. A small flat in their 30s when they’ve got kids. It’s a life that’s been hid reread by delayed ability to buy property. And that’s so common for kids without family help to buy.

The alternative scenario is the kid with the £50k student loans. Yes, from there mid 20s they are paying £100-200 per month and have less disposable income. But if at 28/30 their parents give them £50k house deposit and they’re able to buy, they are much better off. Their salary is paying their mortgage (and also student loans) and they are building equity. They’ve bought before having kids and are able to upsize to a family house.

This is the key question - at what age will someone be able to get on the property ladder and stop paying rent? Whether parents choose to gift the Uni fees or a deposit can be the key thing impacting that. It’s a bigger question than the size of the student debt and the interest. Of course no one wants to pay vast amounts of interest, but instead if looking at it in absolute terms, it’s better to look at how it impacts life. And that applies to the gift of a deposit too. A graduate can suck up their loan repayments and pay them over the 30 or 40 years without it making their life awful IF someone helps them get on the property ladder. I suggest that for most, without family help to get on the the property ladder, the consequences are more negative and for longer, even if they have avoided the loan repayments.

If I had £120k to give each child, I’d pay the student fees and give them £60k for a house deposit.

I haven’t. I’ve got £60k per child. I think it’s better given as a deposit on a property in their late 20s.

I know lots of kids in their 30s who can’t afford to buy. They still pay extortionate rent and are unable to save a sufficient t deposit…even with good jobs. Some have kids now and they still rent. They speak ruefully about their peers who bought 7 years ago with family money and now have flats or houses and feel their future is set. It’s property not student loans that make the big difference to life itself.

@WombatChocolate

If you can afford to pay the fees and give a decent house deposit, then great.

For loads of people though, it’s an either/or situation. Parents might muster £50-60k and can then choose to give it for fees or for a deposit. This is where the key decision making comes in.

So, assume no student debt because the fees have been covered. Great, the mid 20s student starts their graduate job and isn’t paying student loans. Their salary rises a bit. Perhaps they are saving £100-200 per month by not having the student debt. Yes, they’d an save that towards a hosue, but given high rent in the south east they might only be saving a couple of hundred or a little more per month. How long will it be until they can buy? Will they reach their 30s and be wanting kids and still not be on the property ladder? It’s quite likely,e can as fairly well laid graduates who don’t have to fund student loans. So they stay in rented much longer. By the time they buy they only get. A small flat in their 30s when they’ve got kids. It’s a life that’s been hid reread by delayed ability to buy property. And that’s so common for kids without family help to buy.

The alternative scenario is the kid with the £50k student loans. Yes, from there mid 20s they are paying £100-200 per month and have less disposable income. But if at 28/30 their parents give them £50k house deposit and they’re able to buy, they are much better off. Their salary is paying their mortgage (and also student loans) and they are building equity. They’ve bought before having kids and are able to upsize to a family house.

This is the key question - at what age will someone be able to get on the property ladder and stop paying rent? Whether parents choose to gift the Uni fees or a deposit can be the key thing impacting that. It’s a bigger question than the size of the student debt and the interest. Of course no one wants to pay vast amounts of interest, but instead if looking at it in absolute terms, it’s better to look at how it impacts life. And that applies to the gift of a deposit too. A graduate can suck up their loan repayments and pay them over the 30 or 40 years without it making their life awful IF someone helps them get on the property ladder. I suggest that for most, without family help to get on the the property ladder, the consequences are more negative and for longer, even if they have avoided the loan repayments.

Yes, this does need to be part of the calculation. But in many cases DCs can and do live very comfortably and cheaply in their family home while they save for a deposit.

I paid the fees for all 5 children (this is my last year for the twins). I was paying day school fees before then so it was a similar amount so I thus just continued the pain a few more years which had started age 4 with each child anyway.

Amongst all the reasons above there is also psychological - nice not to have this hanging over a student; my children (most) tend to be high earners - 2 London lawyers and 2 law students so far and the women work full time as did I as a lawyer even with small babies so we are not the family where women never work much after marriage or only pin money; also my parents ensured we graduated debt free on the basis they paid for our education (private school from age 4 to end of university course however long including medicine - a sibling, me law etc ) and then we were on our own. I wanted to do the same.

Marching mentions children could still get loans anyway - I had a written agreement with my first that I would fund her without loans IF but only if she did not take out a student loan or have an over draft. I didn't bother with the other 4 children but they stuck to that principle and I suppose once they are 40 or something if they wanted to start all over again with another degree they would have the chance of a student loan at that point.

In my case I have also helped all 5 buy a first property too so it was not one or the other with this.

Xenia your children are very lucky, but quite unusual really. Doesn’t help the vast majority of people trying to decide the best course of action.

I can see the pros and cons of student loads v fully paid for.

It has to financial make sense.

But in many cases DCs can and do live very comfortably and cheaply in their family home while they save for a deposit.

Each to their own but to me an expectation that the adult child will live at home to fund a deposit feels like a far, far bigger restriction and encumbrance than having to pay a student loan. It really impacts on job and life choices if, in practice, they have to set up their life where their parents live.

Yes we have for both kids as it’s cheaper than school fees and there’s a small element of not wanting to “burden” other taxpayers with a loan that will in many cases never be paid back when we can happily afford to pay ourselves

This is interesting. I would be concerned that the student would be considered 'different' if they did not have the loan so I was going to encourage mine to get the loan even though (at the moment) we could probably afford to cover it....

@Lessofallthisunpleasantness - do their friends have to know their loan position?

No they don't need to but, well I am just a kind of chatty person and so are they, and people talk about stuff.

I also thought it would make them value the education more if they were paying for it themselves. Also my first one up I know will work hard, second one probably too, but third just not sure......

We are paying private school fees but I had not factored much in for Uni other than living expenses and was expecting them to top that up with a part-time job.

@HardbackWriter

But in many cases DCs can and do live very comfortably and cheaply in their family home while they save for a deposit.

Each to their own but to me an expectation that the adult child will live at home to fund a deposit feels like a far, far bigger restriction and encumbrance than having to pay a student loan. It really impacts on job and life choices if, in practice, they have to set up their life where their parents live.

Not an expectation, but an option. It's very common in London where house prices are high and good jobs plentiful. But in any case, we expect to downsize when our kids permanently fly the nest, so that will free up capital for house deposits too.

We do, from an inheritance, and as we are "old" parents I thought better to use op the money now than them getting it later and ending up with a big inheritance tax to pay.
Also, I am hopeless with financial stuff and not investing money wisely, hardly getting any interest on it.
We have saved a bit for them when they were younger and well