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.

The question is, how many years are people expecting their adult children (often with partners) to live in their childhood bedrooms whilst they save for a deposit? It does strike me as a little infantilising.

Is it better to have to live at home with parents for perhaps 5 years to accrue a fairly minimal deposit so they can buy in their early 30s and be student debt free, or is it better to be able to buy sooner and start paying their own mortgage and living independently, whilst also having the student loan replacements? As others say, the location of the family home is also a significant limiting factor and won’t work for lots.

Personally (and I’ve paid school fees too, so am used to hefty outlay each term) we will be taking the student loans. And then we will be watching to see what happens with careers, as we simply cannot tell yet, even though the DC are high fliers academically. The loan will accrue interest during the student years and a couple of years into their career we will re-assess the likely career trajectory and earnings.

At that point it might be that we decide the career will be very high earning. We might decide to pay off the loan on the basis that the salary will quickly allow a deposit to be built. More likely, we will take the view that the student loan might never be fully paid off - a decent but not spectacular career is likely for most. My DD may we’ll be interested in a career followed by a time at home as a Mum, and we might together decide that keeping the loan is best and having £60k so a house can be bought be mid to late 20s is better. For most, I think this is probably a better use of the money.

The other thing to think about is other streams of money that might come their way….and crucially when. Many of these kids will eventually inherit something or be gifted too - from grandparents perhaps. It would be a shame to wait until late 30s or 40s to be able to buy a property because only then did you get some inheritance and your parents couldn’t gift you a deposit because they had spent the money in Uni fees. Wouldn’t it be better to have the student loan, to be gifted the house deposit by parents and be on the property ladder by late 20s, and then in a further gust or inheritance arrives maybe 10 years later or so, to then lay off the student loans.

20s and 30s regularly say that the thing that makes the biggest difference to them is family help to buy property. It’s that and not having no student debt. The big problem is amassing the large deposit which is needed, not the regular flow of money to the student loans company. Parental choice about what to do with their chunk of cash (assuming £60k so enough for EITHER/OR Uni or deposit but not both) isn’t just a choice about whether to pay student loan interest, but about exactly when that large deposit might be available….much sooner if from parents, and W much later if it has to be saved up for by the young adults.

Really helpful thought process WombatChocolate, thanks.

We did not look into loans too closely. Partly a "we have started so we will finish" attitude towards raising our DC until they were financially independent. And partly a concern that other parts of the public sector, included elderly care, are very underfunded and we did not see subsidising our DCs University education as a priority. It means an 18 year old car, and a 40 year old kitchen, but who cares. We are comfortable, and DC are both grateful and frugal. If we are having to be careful, they too expect to be.

(FWIW it is not a subject that is often discussed between students, though ironically some of those who seem to have the most to spend have taken up loans and are then generously supported by parents. Perhaps one day they might regret building up so much debt.)

Neither DC will be finished education until their mid/late 20s. (Two different sorts of Doctors.) I assume interest payments would be causing the debt to build up. We are glad they won't have to worry about it.

I am surprised at Wombat's take. Where we live (Central London) it is extremely common for DC to return home after graduation. Indeed friends complain that their DC are urging them to defer a move out of London as they need somewhere to stay. I do not see either of mine looking to buy until their early 30s. With post doc and foundation years they won't know where they are likely to settle. If London they will need every last penny for their mortgage affordability calculations. And who knows by then we might decide to sell up, and give them deposits.

(And next year we expect both to spend time in London. One because his PhD supervisor will be here and the other for her elective. I did check. Both are happy to return home.)

I guess that my focus is on ensuring that at the point when they are ready to settle down in one place, they are able to buy property then.

It can be okay to live with your parents for 2 or 3 years post-Uni, although not all want to. The majority of people don’t live in LOndon or commutable distance either, nor want to live wherever their parents happen to live. So I think most people have to consider that their children probably won’t be returning home for any extended period once they start work.

But what about once you’ve been in work for several years? Surely then it’s time to buy property.

Perhaps some of the people posting on here are in hugely privileged positions in terms of being able to support their children. Perhaps they live in big houses in London, paid school fees and have saved hefty amounts of cash which are well beyond the £60k of student loans. Perhaps they expect their kids to do degrees, post-graduate degrees and to travel and do other stuff that means they won’t be entering the workplace until late 20s. Perhaps they expect to support them for 10 years post-school. And then perhaps they have have large houses with plenty of space for the child and possibly a partner to return home and live comfortably without being on top of each other, while the child travels to their London job and earns their big salary. And vitally, as mentioned by a recent poster, the parents know that at whatever point property purchasing becomes something they want to do, the parents know that again (even thought rhyme already funded Uni fees) they can somehow access another £50k or more to help with a deposit. So the issue of when to buy never seems urgent or especially important.

This is a very privileged position to be in. It’s entirely different to a much larger group of families who have saved perhaps £50k for their kids, and want to use it where it can make best impact.

Lots of families have saved. They don’t live in London and their kids will go onto get graduate jobs in decent but not top paying professions. Perhaps they will be social workers or teachers, engineers or civil servants? They might start earning in the upper £20ks and over time their pay will creep up to around the £50k mark.

They probably live in nice middle class houses, but multiple adults (especially if an adult child has a partner) can feel quite cramped and not something you’d want for too many years. Quite likely their home isn’t anywhere near where the adult child will be working anyway.

So if a family don’t live near London, but there’s a good chance if working in the South East, the child is probably going to have to pay for accommodation. That’s the reality for most who don’t have the privilege of a parent who has a big hosue and can provide free accommodation. Rent is expensive. Paying rent and saving for a deposit is very hard. It could take many years. And if you’re in one of the more typical families who have used their big savings if £50k for Uni fees, there won’t be any more forthcoming from parents. That’s when the struggle to buy property becomes more urgent and the difficulty accute.

So, I think we need to be quite clear that there’s a difference between those who are extremely affluent - able to fund school fees, Uni fees, provide free accommodation in a favourable location and then provide a hefty deposit too, and those who have done well to save a good chunk of cash for their kids, but it isn’t sufficient to pay for school fees and uni fees and a house deposit and to fund multiple uni courses and years out and to provide free accommodation for years.

Of course, if you’ve got loads of money and can pay for deposits and school fees and uni fees and cover other courses and accommodation, you won’t want the student debt and the interest it brings. Of course not. But the question on this thread is about when choices have to be made.

This is a very privileged position to be in.

Nobody has suggested otherwise. But Mumsnet is one of the few places where things like this can be discussed openly. I am not from a wealthy backround myself, but we're now pretty comfortable and as my mum recently died I have a lump sum inheritence. I can't discuss what I do with that with my friends, so I've found this thread really helpful.

Fair enough.

It’s a privileged position to be in, to have £60k and to be even thinking about whether to pay for Uni or instead to save it and gift it as a deposit. Most people can only dream of that as an option.

What this thread reveals, is differing degrees of privilege and ability to support children. Of course, we all know there are varying degrees of this.

I think we all agree that if money is no object and we can help our children with uni fees and housing and all kinds of other things too, we probably would. No prob. No-one wants their kids to have loans and the interest payments in they aren’t needed.

However, where there is a genuine choice to be made, is usually where a family is comfortable and have saved a decent chunk, but still have to choose between paying for uni OR a house deposit. Heaps and heaps more people find themselves faced with that choice. For them, the fact LOndon and Home Counties kids return and live at home for several years doesn’t really answer the question about what’s best, if you can fund either Uni or housing. Those who can fund everything don’t really have many difficult choices to make. These threads about whether to pay Uni fees or nit, really apply to those where choices DO have to be made.

Is it better to use that £60k to allow the child to start work debt free, but without the house deposit, or with the student debt and a decent house deposit.

These threads about whether to pay Uni fees or nit, really apply to those where choices DO have to be made.

I started the thread because I wanted to hear from people who were paying upfront, or considering it, because I'm interested in their reasoning. Please don't put people off posting by ranting about privelege. If people explain their circumstances, it's easy to see whether it's a parallel situation or not, but even if it's not, it's still informative. I everyone who had posted was clearly far wealthier than me, it might have made me question my reasoning but there has been a mix.

I do have a choice of what to do with the money. I inherited enough to put both DC's through uni with half of it, and invest the other half for future house deposits. Or I could invest all of it.

Okay. Apologies if what I said sounded like a rant. Really not intended to be. I have no problem with some people having enough money to pay for Uni and house deposits and anything else too.

These discussions always move to the question of using funds for house deposit v Uni fees, because that is the decision that has to be made by the vast majority who contribute to the thread. Few can cover the full fees and give a hefty deposit.

If you’ve got the cash for both, great….why not. If you can avoid the hefty interest payments for your kids, without it meaning they struggle to get a house deposit together, it seems a decent use of the money to me.

As I said, I ‘only’ have the £60k to give currently. For us, the house deposit probably makes sense. If by chance another source of money such as inheritance appears in future, we probably would pay off the Uni fees…but that’s second priority for us.

I wouldn’t pay the Uni fees though,if it was at the expense of pension contributions, or needing to remain at work for another 5 years. Personally I don’t have a problem with my DC needing to do some of the legwork themselves. If I can avoid them paying hefty internet charges I would, and if I can gift them a sizeable deposit, I will, but I’d expect them to o save hard too and not have enrything just given to them. And I’ve been prepared to save and will happily give to them….but within our overall financial planning which allows for us to retire in our 50s and have decent pensions.

I said upthread that there tends to be a difference in approach between Londoners and those elsewhere.

London can be cripplingly expensive. Yes there will be some with huge salaries and large houses, but there are plenty of others who somehow get by on public sector salaries and relative overcrowding. Yet who will want their kids to be able to take similar jobs and to stay in their home city.

Young people in London do return home both to save money and because rental property is expensive for those whose initial salaries are not great. Plenty will already have lived at home during University, for similar reasons. In other parts of the country young people may expect to rent immediately on finding their first job, and to buy a house in their mid 20s. Different options, different decisions.

Oh and to many being able to retire in your 50s would seem privileged. Then again I suspect because of cost, Londoners often do things later. Rent your first flat later, buy a first house later, have a family later, pay off a mortgage later, and then retire later.

OP it can be wise to let your kids take out at least a part loan so they value the cost of the course iyswim? So even if you can pay it all it’s good to get them invested in it too, quite literally!

Well I would not be keen for them to have a loan as well, but I do strongly advise them to have a job as long it's not at the expense of studying.
Any holiday they work for it first

Put the money to one side and make the decision after they graduate and start work. Paying it off is one option, funding a higher house deposit is another. The start of the course is too early to make a call when there are so many variables. Many students switch courses , or add a masters. Career choices change, the employment market moves. Delaying the decision 3 years costs relatively little but eliminates a lot of variables

@anniegun

Put the money to one side and make the decision after they graduate and start work. Paying it off is one option, funding a higher house deposit is another. The start of the course is too early to make a call when there are so many variables. Many students switch courses , or add a masters. Career choices change, the employment market moves. Delaying the decision 3 years costs relatively little but eliminates a lot of variables

If he was starting in 2023, under the new rules, this might be a good option because interest will only accrue at the rate of RPI inflation. But for 2022 starters it will accrue at RPI + 3% and RPI is likely to be significantly higher than the current 1.5%. To not lose money (in comparison to paying upfront) I would need to avoid savings accounts and invest for growth. Investing in anything over just 3 years in uncertain times with a backdrop of high inflation is very risky, and any gains would also be subject to CGT.

... So it's a risk-balancing decision..The risk of DC not fulfilling his potential versus the risk of my investment not fulfilling its potential. I think I'm inclined to put my money on DC.

I think that university fees should be based on parental income. So many students can’t afford to go to Uni all, whilst others, such as the OPs child clearly can. It’s such an unlevel playing field. I’d like to see it made more equitable.

I guess you could see it as paying for the flexibility of taking the loan (interest payments) which means you then have the option to then pay it off when they start work or any time after, or to choose to use the money for the house deposit if circumstances suggest the young adult might struggle to save their own.

By taking the loan you retain that flexibility to decide. If you choose to pay the fees upfront, you can’t then reverse the decision later and decide you’d rather take the loan and have the cash back for a deposit.

Perhaps taking the loan and then re-assessing in light of how things turn out, gives the young adult more flexibility too - they know they can have the house deposit money if needed, and they can choose a career not purely based on salary.

I suppose some parents feel pretty sure their child will be a high earner….so they know they have an unconditional place on a highly competitive course (if applying post-grades, then the place is certain) and feel they know pretty certainly the career they will go into and their earning power. For most though, there’s more uncertainty about career and earnings. Everyone has to consider how much they can know for sure and what uncertainty there remains. Perhaps more than we think find their children surprise them in all kinds of aspects of their lives and like to keep some flexibility.

Could they not save in a LISA with 25% bonus

I also think of it not just in purely financial terms - not just in terms of minimising the financial cost. The interest payments are certainly a factor, up then so is flexibility. I think that where young lives are concerned, retaining various options is a very good thing. It’s not great for them to feel the course of their life is totally set at 18 and all the funding has been put in place to secure that one possibility and now no other options are viable.

What if the young adult decided to go into charity work or to join an alternative community which didn’t engage in economic activity (extreme example I know) or who became committed to an ideology or religion that involved a very different form of life? These might be hard to imagine for some young people, but stranger things happen. Parents could well be influenced by the fact they had ‘wasted’ £60k on Uni fees and the young adult might feel they had lost their autonomy and right to choose for themselves.

I guess I’m interested in the impact that parental decisions about finances for young adults have on their ability to make independent choices and actually be adults, rather than overgrown children who are still financially fully under their parent’s control. When does it end and the child truly takes in full financial autonomy.

Just musings.

@Soontobe60

I think that university fees should be based on parental income. So many students can’t afford to go to Uni all, whilst others, such as the OPs child clearly can. It’s such an unlevel playing field. I’d like to see it made more equitable.

Only because my mum died and I inherited from the sale of her home. If her terminal illness had started 3 years later we wouldn't be able too. Not sure I'd call it lucky, just circumstances. Or perhaps you think the Govt should start including all families' potential future inheritences in the means testing? That would exclude a high proportion of students!

@BluebellsGreenbells

Could they not save in a LISA with 25% bonus

You can only put £4k a year in a LISA, so it would barely scratch the surface.

What if the young adult decided to go into charity work or to join an alternative community which didn’t engage in economic activity

This is where the risk assessment comes in. Martin Lewis suggests you need to be 100% certain these things won't happen. But many parents know their DC well enough to make a more nuanced judgement.

If my DC decided they did not want to engage in economic activity, I would not see subsidising them to go to University as a good use of taxpayers money.

Anyway I am happy that they will be able to leave University with a clear sheet financially. I think it has helped that they know that it was our money, as opposed to some sort of student finance that they were "entitled to".

Not sure if we are doing the right thing or not.

We inherited some money 10 years ago and invested in a flat in the home counties. We saved the income and now the rent pays for DC's rent at university.

DC has a LISA which was taken out at the start of the pandemic (March 2020 and then April 2020) when the stock market hit rock bottom, so it has grown by 55%.

We advised DC to take out the student loan (fees plus minimum maintenance). When they want to get on the property ladder, we will sell the flat, add the money saved by not paying for uni and the saved flat rental (50K + 100K) plus LISA and they will probably be mortgage free rather than student debt free. Is this a stupid idea as a future partner could take half a property but not half a student debt?

They have no idea what they want to do after their social science degree.

hoe are all good posts including Wombat's. I have paid the fees and helped the children to buy a first property - in fact the twins have a small house each despite still being students which they let out because their brother who is 10 years old was going to sell his house to buy another and it made more sense to keep it in the family for the twins. They are very lucky indeed and of course they might have preferred also to have the student fees costs as a cash gift later instead but I did not give them that option.
I am like the poster above - in the view of we have started so we will finish and I wanted to do what my parents did - they made my very minimum student maintenance grant up to a full oe. Also my daughters' fees were £1k a year plus accommodation costs and my older son £3k so it would feel a bit mean to make the twins have massive student loan debt just because the state had increased fees to £9250 so I also wanted all 5 children to have entirely the same financial situation.

Diian, not it's not stupid. I have two daughters who are married (and work as lawyers) and if they were to divorce what I have given them for housing would be at risk but that is a risk I and they are prepared to take (and their husbands have similar assets and incomes anyway).

Let’s not pretend otherwise, even considering being able to fund your child through Uni is being in a privileged position, but not everyone of those families is privileged per se. My DC’s father is funding their Uni education but in sacrifice he’s worked overseas for 7yrs of their life so far (and they are 14 and 17) so both parents are from working class backgrounds but have worked their way up to decent salaries by working hard. I don’t think anyone should be put off or shamed from giving their experience on this thread, as we are all privileged here, compared to many parents who are wondering how they will top up the student loans etc.