Please or to access all these features

Add post

Watch this thread

Save thread

Start a new thread

Flip thread

Hide thread

My feed

Active Unanswered threads

Getting started FAQ's

Unanswered threads Acronyms Talk guidelines

Hide shortcut buttons

Talk

Higher education

Talk to other parents whose children are preparing for university on our Higher Education forum.

Flip

1 2 3 4

Original poster

Parents paying university fees

97 replies

Fairydustandsparklylights · 07/01/2023 21:12

I’m posting following a conversation with my aunt and uncle as my cousin is starting uni in September. My dc are still young but it got me thinking so I’m curious as to what other people think.

They have a decent amount saved and were planning on paying for university and giving money each month and then giving money towards a house deposit when the day comes. However, the advice from Martin Lewis etc. is to not pay upfront so they have now decided for my cousin to
take the loan she is entitled to and top her up. Then, when she starts working, they said they will pay her student loan for her out of income / pension. This way they can give her more towards a house deposit.

Their plan is for my cousin just to tell them the amount and even though it will come out of her salary, they will just transfer the amount back to her each month.

As they say only the super rich should pay up front, I think their idea is a great one. They can afford the repayment easily and their daughter gets more for a house deposit. Are there any down sides they haven’t thought of? Does anyone else do this?

OP posts:

chopc · 09/01/2023 18:34

@Janieread my DS school fees were £32K. My DH wouldn't entertain the fact he may end up with a low paying job.

thirdtimeluckyorwhat · 09/01/2023 18:40

Moominmammacat · 08/01/2023 10:01

I did and sorely regret it as mine have chose careers where they don't earn enough to pay back.

This is exactly why you should never pay upfront The majority of people never pay it back and if they do earn a good salary it's a very small amount that is taken from their wages. It makes no sense to pay upfront

HarryArry · 09/01/2023 18:51

We didn’t pay upfront for fees, we contributed 6k per year for each DC towards rent etc and have a large lump sum for their home deposits.
I have never earned enough to pay mine back and now they are written off.

lljkk · 09/01/2023 19:08

Thing about a house deposit is the DC has to be ready to buy.
if you know they'll buy right after graduation then why not buy them accommodation at start of Uni course, this can be excellent investment: even better than saving 'for them'.

Then they have to know they are earning enough to bear the mortgage, that they will have that job in that place for long enough to make the property purchase worthwhile. If earning enough early after graduation to cover a mortgage, I suppose they probably are on course to be one of the 'higher earners' who abound on MN. And for whom not having Uni debt might be good thing...

We could have done worse things with the spare cash than reduce some of 3rd DC's Uni debts.

HarryArry · 09/01/2023 19:17

if you know they'll buy right after graduation then why not buy them accommodation at start of Uni course, this can be excellent investment: even better than saving 'for them'.
How would you know where your DC wants to live, they could get a job anywhere?

BeaBachinasec · 09/01/2023 19:34

However if you have a daughter and are in a family where women serve men

Here we go ...

lljkk · 09/01/2023 19:39

I know a lot of people still living in city where they went to Uni, decades later. tbf, I didn't stay in same city. It was about 10 yrs after I finished Uni before I was ready to buy a property. Luckily my parents went thru an acrimonious divorce instead, so hadn't tried to save me money for a house deposit.

piedbeauty · 09/01/2023 19:43

@Janieread -I don't understand this attitude at all. What a waste of money!

We can afford to pay a deposit on DD's flat if and when she wants one too.

We didn't want her starting off her working life with a massive debt - that the govt could change the terms of at any time. I don't like being in debt. 🤷🏼‍♀️ If dd is going to benefit from a Uni education I'd rather pay it now.

It's unsustainable and immoral for thousands of uni loans to go unpaid, and it's unethical to take out a loan with no intention of paying it off.

So no. To us, it's not a waste of money. But thanks for your learned opinion 🙄

Twinklenoseblows · 09/01/2023 19:49

When I was at uni loads of people whose parents were paying their fees took out their loans in secret so they had more fun money. Can still easily be done now. So when the time comes I'll have mine take out the loan and then consider ways of clearing it later be that as a lump sum or by covering repayments.

HarryArry · 09/01/2023 19:56

Slightly off topic but I used my loans as a house deposit, it was years ago and I got a cash back mortgage which meant the deposit I put down was paid back to me. I then used the cash back to pay for my wedding.

greenspaces4peace · 09/01/2023 20:00

yup fully paid for all three to complete university.
we don't like debt and didn't feel it was right to have them start their lives with a burden.

greenspaces4peace · 09/01/2023 20:01

plan on paying for the grandkids as well.

Teriyakieverything · 09/01/2023 20:07

I think there are cheaper ways to borrow the same amount of money. At the moment interest is charged at RPI+3%, starting next year it will be RPI, and only gets written off after 40 years.

I did the spreadsheets, assuming taking out loans just for fees, and modelled it based on different levels of assumed earnings. Bearing in mind 9% of your income as minimum repayment is not a small amount of 'extra tax' to have to pay, especially if you end up being a high earner. That's the % most people could hope to contribution to their pension. So I'm with you @piedbeauty . But based on our circumstances, it involves sacrifices whichever way we cut it.

Janieread · 09/01/2023 22:00

chopc · 09/01/2023 18:34

@Janieread my DS school fees were £32K. My DH wouldn't entertain the fact he may end up with a low paying job.

😂

Onnabugeisha · 09/01/2023 22:27

Then, when she starts working, they said they will pay her student loan for her out of income / pension. This way they can give her more towards a house deposit. Their plan is for my cousin just to tell them the amount and even though it will come out of her salary, they will just transfer the amount back to her each month.

One small flaw with this plan is that starting 23/24 school year, loan repayment will be for 40yrs after graduation. Do they expect to live that long?

Also the new system coming into effect will mean even median earners will not only pay back every £ they borrowed, but will clear the interest as well. Martin Lewis estimates 52% of borrowers will clear their loan (principle + interest) in full compared to old system where only 23% managed this.

The interest is currently capped at RPI- but who knows what the Gov will do once the cost of living crisis is over. It’s not going to last forty years, that’s a certainty and the Gov can change the loan T&Cs unilaterally any time they want to do so.

TizerorFizz · 10/01/2023 09:00

This reply has been deleted

Message deleted by MNHQ. Here's a link to our Talk Guidelines.

TizerorFizz · 10/01/2023 09:02

@chopc
We paid more than you for education but have a more relaxed view on future careers for Dc. Maybe that’s why you got so upset about the “Oxbridge reject” tag your DC acquired. DH is presumably a tiger parent!

Ariela · 10/01/2023 09:08

Things to consider: will grandparents or even parents be likely to die with inheritance tax due? It can be cheaper to pay off up front , reducing the IHT burden (high %) vs loan (not such a high %, but at a worryingly high % currently)
Will child earn more than threshold and be forever paying back, or have v high earnings and can pay back quickly? Or low earnings without payback?

Greatly · 10/01/2023 09:20

TizerorFizz · 10/01/2023 09:02

If she means 32k in total then I paid that every two years for Dd3 and she wants to work as a groom 😂😂🙄

Onnabugeisha · 10/01/2023 10:46

This reply has been deleted

Message deleted by MNHQ. Here's a link to our Talk Guidelines.

Under the new loan plan starting this year, Martin Lewis calculated that 52% of borrowers will pay their student loans off during the 40yrs of repayments. This would be the £ they borrowed plus interest which is currently capped at RPI which is 9%.

It is a loan in “the conventional sense” as it is money you owe and you must make payments if you earn over the threshold.

The Government can change the terms of the loan at any time they want to, affecting how much you end up paying. Specifically, they can change the interest rate, the threshold, and the % of income over threshold you pay towards the loan balance.

Do you seriously think teachers and nurses should pay it off?
Under the new system, teachers and nurses will most likely be paying off their loans in full. Anyone with a starting salary of £30k will certainly be. Given nurses and teachers are middle earners, they could end up paying back double to triple what they borrowed.

Of course the ‘FACTS’ website makes much of the total amount being repaid not being ‘adjusted for inflation’, but that’s a bit of smoke and mirrors intended to confuse people into thinking if they borrow £50k, they won’t be paying back much more than £50k. When of course they will be.

IngridIceberg · 10/01/2023 11:31

@chopc of course pay what you want for school fees. Very sad that there have to be strings attached, with a DH not entertaining the fact they may end up with a low paying job. Not his life.

TizerorFizz · 10/01/2023 13:19

I have no idea why my post was deleted. I too had talked about lower paid professions needing a degree but not ever likely to pay off the loan. Therefore it’s not wrong to take a loan you know you won’t pay off. It’s an odd way to look at student finance. Loans have widened participation but released the taxpayer from 100% commitment to funding them. For lower paid people to be funding people who will earn in a year more than some of them earn in 10 years probably was immoral. The way to look at student finance is to view it as a tax. Not money loaned as a bank loan with those expectations. I’m amazed pp didn’t understand this.

IngridIceberg · 10/01/2023 13:27

Nurses etc. absolutely not an issue if it is never paid off in my book. Loans for useless degrees that are never put to any use other than buying the DC time to have a good social life and put off working for three years are a different story.

TizerorFizz · 10/01/2023 14:03

@IngridIceberg
Degrees might seem useless to you but it appears plenty of Dc want them. At the moment all sorts of degrees are available. Which ones would you cull? Which ones do you consider of no value?

Where Dc do not earn £25,000, they pay nothing back. In your world, how would you change this? Those earning £30,000 will pay back £450 a year from 2023. That’s the average grad scheme starting salary. No the average salary gained by graduates.

The government thinks the new scheme will see just over 50% pay back loans. At the moment it’s 23%. The taxpayer pays the 77% at the moment. The new scheme reduces this commitment. If you don’t want the number of grads we have, what courses do you cut out?

IngridIceberg · 10/01/2023 14:27

I'm not saying every useful degree has to be a masters degree from a top university. There are lots of useful degrees in all sorts of subject areas but there are some quite useless ones. Fashion PR was something mentioned to me recently. The parents could easily fund but decide they won't as the DC is unlikely to earn enough to pay it back. In addition, the DC never sticks anything, irrespective of cost, so I could bet my house that it will be abandoned. Total waste of government funding. I would rather the funds were channeled to the degree of a nurse or physio, engineer or many other useful areas including ones which make a societal contribution. There are also traditional arty degrees which are definitely worthwhile but don't pay well ie. antiquarian book restoration. They are valuable in a wider cultural context of course. I believe a solution is that everyone should pay back their loans with consideration for their earnings level. The current system leaves many scot free and others carrying the can, particularly galling when their parents have the funds but choose not to as the DC aren't likely to pay back.

Also, it's all very well saying if they are high earners they can afford it but the threshold is such that in reality mid-earners are paying back. There is a big difference between a teacher's salary and an investment banker's for example.

Flip

1 2 3 4

Swipe left for the next trending thread