Tuition fees - pay upfront or take loan?

[Whatwillbe2]

My DS has inherited some money from an aunt. Would it be worth paying his university fees with this money instead of saddling him with paying a student loan when working? He’s very intelligent and money driven so I suspect he’ll be earning well in his career which means he’s likely to have to pay the student loan back & interest. I realise it’s a risk that he doesn’t need to pay it back due to salary but equally it seems silly if he has money available. It also seems the goalposts keep changing and who knows what rules they’ll change next! I also realise he’s very lucky to have this choice.

Degrees are supposed to confer higher earnings. If they don’t, then it’s really not worth doing at all.

Employers need to stop asking for degrees as a basic requirement for a job though.

Although I think the benefit of uni/a degree is not just future earning potential.

First of all, the payments on a mortgage are not remotely the same as student loans. Comparing interest rates on the two is utterly futile. The loan doesn’t have to be paid at all if earnings remain low or DC work part time. Women are more likely to work part time so, yes, they were less likely to pay the loans back in full.

it’s a moot point whether degrees should be required for some professions. There should still be other routes but of course degrees speed up the qualification process. I do agree that university education is a good thing overall but I think too many now go. There are courses and universities that need serious culling. I’m not sure I think any student should not strive for a better job after university. If they don’t get that then we have merely paid for them to have a great time. We don’t get the loan back and we don’t get much tax from them either. So that model is very expensive and is arguably paid by people who never went to university and poorer people who now cannot afford to pay for their own children to attend university. It’s a luxury to go for 3 years if you could have worked and studied part time for example.

I do not want to put off deserving DC going to university. I do think poorer families without a legacy for DC will now question the loans. There will be more students living at home and possibly not reaching their potential by choosing a less good university. Potential I believe is work. This is why degree, university and future work matter. In my view!

It would have to be an investment that beat 12% which is good going.

I think it’s also worth the student having some sort of loan so they feel personally responsible for their course if that makes sense. That they are investing in their own future and truly value the cost of it. Possibly more relevant to those from wealthier backgrounds?!

@Newgirls but it wasn't 12% when we were at uni

Seriously not £5 a month!!

it’s a moot point whether degrees should be required for some professions.

It's not though when in the same paragraph you are saying too many go. A degree was a requirement for my job, my bosses don't have them & it's not actually needed. DH needed a specific degree for his & again his bosses don't generally have one. Some firms now ask for a masters.

The 12% is temporary though, will go down to 7ish from March 2023 when the cap kicks in. Agree uncertainty is not helpful however.

Sure - not sure anyone could make money from these ‘loans’ today

@giggbig
What I’m saying is that degrees should not be required for some professions. Revert back to previous training methods with improvements. Learn on the job with day release to a higher education college. This is why too many students doing unnecessary degrees. Of course too many students go. That’s why they don’t earn a premium and repay the taxpayer loans. The higher education model is far too weighted towards degrees. They are not all needed but clearly elite professions do need them. Lots of, for example, health ones don’t. Everyone was competent before degrees were required.

Yes but until employers change requirements young people will still feel they need degrees particularly in a tough job market.

And of course there should be other routes & way more investment & development, the economy has been starved of this. The country may then see an increase in productivity!

@LowBatteryLife

The whole point of the thread is that the lien structure or grad tax is changing. The repayment threshold is coming down to £25,000. The loan period will be 40 years. What your payments are on a previous system are irrelevant. My DDs just about to pay hers off before she’s 30. Everyone is different but in future the new arrangements mean lower and middle earners will pay more because of the threshold and longer repayment period. You should catch up with Martin Lewis!

I mean the NMW for an apprentice over 19 is £4.81!!!!

I earned more than that in a shop job more than 15 years ago.

I paid (because it was the same as school fees i had been paying out of my earned income since the children were 4 (indeed same as their full time childcare costs from when they were babies)..... I have also helped each of the 5 children buy a first property. So for me it was not one or the other.

However if he does not plan to earn much then he should take the loan and keep the £50k for a deposit on a property but not in his university town as he will move after.

£50000 makes a tiny dent in the cost of property these days I'm afraid.

@Cookerhood

Not in plenty of less “desirable” areas where property is less than £150,000. It’s a very decent deposit.

@giggbig
Employers are faced with huge numbers of uni grads. They don’t see decent recruits who don’t have a degree for lots of jobs. Employers often have standards that grads don’t attain in the selection process. So new grads don’t get the jobs. They actually prefer to retrain older people on apprenticeships to poorly qualified 18 year olds or average degree holders. 18 year old apprenticeship starts are 3500. Degree starts are 450,000. These are the people employers see applying and not all are employable .

I think the employee training model should be reviewed but schools recommend university and parents pay up. Most are proud for Dc to go. Maybe it’s them who should stop valuing the university experience and have a louder voice advocating employment and training?