Apply student finance England for £1 or nil?

[Lasvegas]

dd starting university next month. I am paying her tuition fees and living expenses definitely for year one.

But she may need a loan in years 2 and 3.

She needs to register in 22 as apparently in 23 they are changing the rules and then you have to wait 35 years before the loan is written off at the moment it’s written off after 30 yrs.
so she is applying and customer services said to put nil in the amount borrowed. Has anyone done this? We cannot get past a certain field in the application portal. Maybe the only way is to apply for a loan of £1? Any one have experience of asking to borrow a nominal or zero amount just to get into the system.?

thanks

Your DS can hedge some of that by throwing £4k/yr into a LISA if you have the capital available. You get a 25% bonus on that!

Because the interest rate is massive... I've been paying it back for 4 years and my total has gone UP.

Am now in £65k worth of debt. And I believe it will only climb.

@TheWayoftheLeaf but the amount you owe has no relation to the amount you repay.

Can the terms of student loans not be changed in the future too?
So who knows what the repayment levels will be in 10 years time

@AyBeeCee when you take out the loan you sign an agreement setting out the terms. So no it can’t just be changed retrospectively.

It's fine so long as the future mortgage interest rate is less than the interest rate on the turned-down student loan (likely, based on current trends). Also, if the parent is at risk of being in the inheritence tax bracket (as many are in the south, due to higher house prices) then it's better to gift the cash sooner rather than later. Paying education fees has no inheritence tax liability, whereas if you hand over a huge advance towards a home in the future, and don't survive for more than 7 years, you could be landing your child with an inheritance tax liability. So, like I said, there are more factors at play than are covered in Martin Lewis's blogs. When someone says they have researched it thoroughly for their own circumstances and concluded that its better to pay upfront, they are likely to be right.

It can, because it's the government that dictates terms and they can effectively do what they like. For example, having pledged that the repayment threshold would be upped each year in line with average earnings, then from (I think) 2012-2015 they froze the repayment threshold so that people had to repay more.

The agreement I signed said I would only repay if I earned above the national average so that is what has happened. Obviously if they haven’t stuck to that for some loans it wasn’t in the legal agreement that was signed when the loan was taken up.

LISA is terrific idea, thanks for that suggestion.

You're welcome! When I found out about them I kept looking for the catch. As far as I can see, the cap on the house-price it can be put towards is the only one, but that only really applies to London. (And the way you lose out if you need to withdraw the cash for other purposes, but that's fair enough I think.)

My DD, on our advice, is moving her matured-JISA-and-now-an-ISA funds into a LISA at 4k per year. In other threads here you'll find a lot of horror stories about DC who blew all the money, so I know we're very lucky.

While that is the case with commercial loans, the terms of the student loans mean that they can (and have been) changed retrospectively.

@blymey
Yes, the inheritance issue, and the fact both DH and I are "older" parents with health issues, helped make the decision to pay fees etc up front

Re the LISA, it'll be interesting to see if future Governments raise the £450k house price cap in line with inflation. They're good for people with surplus cash saving for a house, but not a good if used as an alternative to a pension. Very few financial institutions offer LISAs, partly because they had their fingers burnt with CTFs (account types introduced for populist political reasons aren't guaranteed to have longevity beyond a change of political leadership) and partly because they are complex products, potentially risky for people on low incomes who may urgently need their money back well before they are able to buy a home or retire.

It is quite a complex question because you are not sure of the future years. I was sure (that I would pay all years of fees etc) so we put zero and did not then have to fill in the bit of the forms about parental income etc.

On whether they should take loans or not if parents can afford to pay that is up to the parents. I was already paying school fees so it was just a continuation of that cost and most of my children were likely to be high earners - 4 have done law of the 5 so the rare kinds of jobs where you would be paying quite a bit back ie most your income is over the ceiling for repayments so most has the 9% added until the loan is repaid of course.

In this case it sounds like there is a change in student loans repayment period that is a key issue particularly if there is a high chance the student in years 2 and 3 might well be taking out the loan so putting down £1 might be best and then submitting all the financial information they want as if the student were taking a massive student loan is probably the downside.

@Xenia "submitting all the financial information they want as if the student were taking a massive student loan is probably the downside."

This might be a new thing, but the student/parent can decide not to give the information, in which case the student is only eligible for the minimum loan. As my DD was in that category already, she ticked a box and I wasn't asked for any info.

That’s not a new thing, my parents declined to give their information in 2003 so I ticked the same box 😊

I dont know if it helps but DD had to apply to Student Finance for DSA even though she was not taking out a loan.

The debate comes up every year and gets surprisingly fierce. It tends to highlight differences between Londoners and non Londoners. It is also worth remembering that any decisions involving money are only partially based on the numbers. Behavioural economics issues like desire to avoid debt or propensity to save come into play. Both DC are thrifty, happy to cook from scratch and take lunches in. They are happy to have no debt, but equally determined that they contribute by not asking for more than they needed. We might have come to a different decision if we felt they were wasting the money.

Other points:

1. We are from central London and there is a fair chance one or both will return here for their careers. The practical help is to allow them to return home and not charge rent - and have them be able to maximise borrowing, when they eventually buy, by not having other debt.
2. Both are taking ages to graduate, as one will end up a medical doctor, the other a PhD. Both should eventually earn good money but it won't be for a while and they are already mid 20s. It would have been daft for them to be racking up interest on large debt during the relatively long time they are earning very little, given that in the end they will be earning enough to repay.
3. My parents needed a lot of support for about a decade. DB could not help because he was busy earning a huge City salary. I could not afford to give up work as well as pay the additional costs of a weekly round trip of 200 miles - more in a crisis. Yet trying to juggle it all was killing me. Finally it was agreed that DM would pay for DDs education. All win. DM did not depend on the State at all, did not have to go into a home and retained her dignity, DBs inheritance was preserved as her care costs were lower and we did not have to sell her home and paying for education is allowable under IHT rules, DD starts working life without debt, and I, just about, preserved my health and sanity.

I would add that though they don't mention it to friends, both DC know they are lucky and are very grateful.

I would add that though they don't mention it to friends, both DC know they are lucky and are very grateful.

Yes, worth keeping to themselves, not least because they would be told they were stupid by some and wouldn't be able to explain without revealing all of the family circumstances.
I did read a mumsnet comment once which said they had weighed everything up and decided to let their DC's take the loan, partly because they didn't want them to feel left out when all their friends were discussing their debts. Horses for courses! 🙂

I thought that the terms of the loan were be based on the first year of study, not the first year a loan is taken. But this is based on trawling the press and the information I could find online about the changes so may be incorrect.
5 Which repayment plan are you on?
How and when you repay your loan will depend on when you started your course.
www.gov.uk/government/publications/student-loans-a-guide-to-terms-and-conditions/student-loans-a-guide-to-terms-and-conditions-2022-to-2023

DS's response was a bit like this, when we crunched the numbers and decided it was mad to have him take a student loan for as long as we we could afford to fund it - he didn't want to be the only one without a loan (which I thought was a bit bizzare). Our solution is that he is taking a loan - but from us! Just not at the interest rate charged by the Government as that seems extortionate (although he might not tell anyone that). But on the same terms in terms of repayment as the government loan in terms of percentage of salary (although if we die, he needs to use his share of the inheritance to repay it - so that other siblings don't lose out, them not being university age yet) . Our thinking is that we might need that money for our later care needs (I have a DF with Parkinsons, and the care needs are extortionate). Of course, if he never earns enough, he will never repay us, but since he is starting a medical course, if he does manage to get through it he is over the threshold immediately he starts as an F1, I think. It might not be so tax efficient I guess to have a loan rather than a gift, but I do worry about care needs in the future, despite pensions etc. And it will be any number of years before he can think about a house, given he won't know what part of the country he will be permanently working in for many, many years.

The bigger divider, at least initially, is how much a student has to spend. People spend in different ways. Some students take loans, which they will have to repay, but also get lots from parents, so can demand en suites, run newish cars, sit in City centre coffee shops, take taxis, order Deliveroo, and be lazy about buying train tickets in advance, returning broadband routers, cleaning flats at the end of tenancies etc.

Oddly I think it helped that DD knew her spending money came from us, and that we were being frugal. She had about the same as those on full loan whose parents could not afford to contribute, and it was fine. The closest friends of both DC were first generation University. Social life involved playing sport, cooking dinner and looking forward to a big event. Also meeting friends at the library because they were too mean to heat their flats. Part of the purpose of going away to University is to meet friends from different backgrounds and though people work it out eventually, by this stage friendships are made and it does not matter. Weirdly the first thing that marked DD out as coming from a more affluent background was when she mentioned she was going home for her six monthly dental hygienist appointment. Who knew. She then gained kudos for silencing a bragging Old Etonian by mentioning the school she went to. None of her friends had heard of her school, and there was no culture of exchanging school names, so they were impressed at her ability to take part in private school top trumps. But friendships were based on sport, or pulling her weight in group projects, or inviting friends round for dinner.

DD will spend her final year on placement, and so have accommodation provided. We could pay for her to rent a room in her University town to use at weekends, in part to make up for the 18 lockdown months she ended up spending at home, but she is not interested. She wants to join her friends crashing on sofas etc. She is very lucky to be finishing without debt and to have that cushion of money that buys your way out of problems (flat deposits etc), but her friends, if anything, are only dimly aware that her family is better off than theirs. (And maybe we are not.)

On a different scale but then when I was at University one of our friendship group came from one of the very richest families in his country. He lived in a very large flat in Park Lane, which over time became a sort of hostel for homeless students, and a place to hold parties. He was a great guy, and I think enjoyed the fact that he was accepted for his own sake. I remember mentioning to someone from the same country that I knew him, and apparently it was a bit like hanging out with royalty. It never crossed our minds and we were happy to muck in to help clean up the flat when his parents were about to visit.

Bikcom - I think we assume that the family is there to help each other. We should be OK, but if not, we would hope that DC would help. Essentially, though without formalising it, a sort of loan. Part of my motivation in looking after my mother through a decade of dementia was to set an example. DB would not do it. I have no idea in the lottery of life whether my DC are more likely to look after us, than his DC are likely to look after him. I also hope they don't have to.

Hi Everyone. So... DS was going to take full loans available but now we only want to borrow token amounts, as discussed here. How does DS do that? Does he login into his student finance account & somehow specify the new amount there?

I've had a busy few days but want to try to get everything organised tomorrow when I can concentrate. is it really that easy to change? thanks in advance for any specific instructions.

Ragged, I expect chaning the amount is a similar process to cancelling it. It wasn't obvious to us how to do the cancellation, so we sent a message to ask, and this was the reply, which may help you too.

Thanks Blymey, we did it (!) Had to "expand" the application, option was under there where we could change the amount to borrow.
The SFE video was quite useful in explaining to 'expand' the application.
48 hours to get confirmation of the change.
Not sure how we'll get invoiced now for tuition fees, but will solve one problem at a time !

Accommodation I understand better how that gets billed & paid.
Already paid accommodation deposit, for instance.
Will try to update as things happen.

Some students take loans, which they will have to repay, but also get lots from parents, so can demand en suites, run newish cars, sit in City centre coffee shops, take taxis, order Deliveroo, and be lazy about buying train tickets in advance, returning broadband routers, cleaning flats at the end of tenancies etc.

OMG @Needmoresleep at these spoilt students getting money from their parents and demanding en suites and sitting in City centre coffee shops

We’ll be shelling out for an en suite for one of ours, not because they demanded it, but because of SEND. I will tell them that under no circumstances are they to take taxis unless they put a sign on themselves to declare their invisible disability. Nor are they to sit about in City Centre coffee shops. Don’t want people thinking them spoilt and lazy and, heaven forbid!, me the type of mother who would bring up such children.

Oh and I’ll tell them to make sure they find best friends who are “first generation University”. You know, for bragging points, since DSC went to private school.

Thanks for the tips 👍🏻