Why worry about your kids student debt?

[saladcruncher]

I finished uni in 2010, and became eligible to start my repayments from April 2011.

This was under plan 1 - the 'pay via tax method'

Plan 1 has a 25 year write off, so any remaining debt will be forgiven at the start of April 2037.

I'm already 13 years through this and in those 13 years, I've paid off I think up to 90 pounds. And I'm not going to be paying anymore anytime soon.

Basically it looks like I'll reach the write off period and have paid off 0% of my student debt - a free degree in effect.

I took out the full maintenance and tuition fee loans.

My question is, why are some parents trying to pay huge chunks of their childrens tuition fees or living costs in this situation, when the money could be put into a savings account for a house deposit etc in a few years time?

Granted a lot of people won't be earning under the threshold like I unfortunately have been and the write off is later but the principal is the same.

Motherof4 on the being fair to each child point I paid their fees/rents. Children 1 and fees were £1k a year plus rents, child 3 £3k a year fees plus rents and last 2 week £9250 per year plus rents (and their post grad even higher). I feel this is fair as they are treated the same and it is not the fault of younger ones their fees are higher - a bit like my parents paid a massive amount difference between minimum and maximum grant (we only got the tiny minimum) whatever length of course we did - my brother did medicine so long course and more years as a student and he was paid for - my law courses were a bit shorter. I never felt that unfair as I could have picked medicine instead and nor would I have expected my parents to pay me in cash the difference. So I have just really followed that through on to my own children.

I can see they do look at affordability so I think monthly repayments are considered. However a bigger deposit helps a lot. So the op has a point.

Also, my DDs cannot live at home and do their jobs! Us country folk don’t have access to high paid city jobs on a daily basis. One of my DDs has a highly paid job but commuting from home would be impossible!

Yes, each set of parents has to decide what is right for them and lots of different answers for lots of different couples can all be right. I certainly also understand the position of even some very rich parents who think children will appreciate their degree and university years more if they are taking responsibility for and paying for it themselves as they are adults etc too.

I feel as content I made the right decision for the 4 children who are lawyers as for the one who probably would never had paid back his student debt due to low wage - it's done, it was the right decision. I could even add that I saved the British tax payable and therefore also saved me money by funding the children too particularly if all the loan would never have been paid back.

The Bank of Mother closed in Jan 2024 when the twins qualified as solicitors. All 5 children now own a house and in a sense my job is done. ( I don't support nor contribute to grandchildren).

I’m paying fees for all 4 so none will graduate with debt. All work extremely hard at weekend/holiday jobs and save hard. Even the youngest (17) has saved 4.5k from work (not birthday money etc). My eldest graduated from uni in 2018, has gained post grad quals while working paid for by employer, moved jobs to get salary bumps, also done babysitting and dog sitting on the side, has saved and saved and at 25 just bought her first flat in London. She would not have got the mortgage if she was paying 9% of her income to the student loans Co.
So that is how we are doing it - graduate debt free and show us what you can do. That was also how I did it (being of the free uni generation) so I’m pleased I can replicate that for them.

The issue with the house deposit argument is that it assumes that you are able to settle. DS, who would like to be an academic, will have had interviews on three continents in three weeks. Who knows where he will end up, and where he might go after that. Not having to make student loan repayments, especially on interest compounded whilst he took his Masters and PhD, will be a great help. Starting salaries vary a lot. Some, including in the UK, are not great.

DD in her first year as a junior Doctor. There is a massive bottle neck after F2 as there is a huge shortage of training places for different specialisations, whilst locum jobs are drying up as junior doctors are replaced by physician associates. If she wants to continue working her choices will be to take training or a locum job wherever it is offered in the UK, move to Australia who are happy to offer jobs to unemployed UK doctors, or to find a job outside medicine. Either way she is better off without debt.

FWIW I worked hard to ensure my mother, despite needing care for over a decade, stayed out of a nursing home which saved a lot of money and meant she was able to pay for DDs education out of income. (She moved to sheltered and we rented out the family home and employed carers directly.) Hard work for me, but DM would have hated a home, and the costs may well have meant that she eventually needed state support, whilst DD will benefit from not having to pay interest for perhaps the rest of her working life.

I would add that DD, out of principle, saves the amount she would be paying if she had student loans. When she is in a position to buy she will have her deposit.

These Plan 5 loans for 40 years are longer than mortgages. It's like a never ending sentence hanging over DC neck. It also affects how much they can borrow for a mortgage because the banks stress tests take how much is repaid to student loans into account when deciding on multiplyer for borrowing. If BoE interest rates come down so should interest on these student loans.

@caringcarer How else would you fund 350,000 dc going to uni at age 18 each year? We don’t like loans and most cannot afford to pay up front. So what do we do? The uni courses such as stem cost three or four times the fees levied, so what is the answer? Possibly far fewer go to uni but what political party will put that forward? So you have loans. It’s not obligatory to go to uni at 18 but the unis cannot make ends meet.

This might be off thread but I don’t understand how all unis can feel broke. I am sure that some choose to spend money in ways that might look like luxuries. Some very niche subject specialisms out there for a start. Anyway up to them but I do take the idea they are all struggling for funds with a pinch of salt

Me too, have you seen how much salary they are paying not the lecturers but Chancellors and Vice Chancellors. Many of the Chancellor's salaries have more than doubled since the £9k a year for most courses was brought in.

They can't retrospectively change it. Wish they could as I went in 2002 and so it doesn't get written off until 65! But I'll have paid it off. Last time I asked about a year ago? They said 7 yrs. But then I had a tax problem so paid some extra tax which pulled payments down to 80 instead if 120 so I'm just guessing now I'll pay it within 10 years by 50.
Colleagues have paid it off and say it feels like a free pay rise, can't wait!

Plan 1! It's a doddle in comparison to the later ones. (I have kids on each).

Also off thread but I can't see we've gained anything from the bright idea to effectively privatise HE. It did solve some problems but it really has created others, in the freedom to run whatever they want. Eg some huge poor quality courses at the new universities on the " pile it high, sell it cheap" model.

I literally haven’t given my children’s university debt a moment’s thought. I pay their accommodation and top up their loans. I can afford to pay fees etc but it makes no sense. They have a great big deposit each for a home and I am perfectly happy they are investing in their own future.

The trouble with student loans is that you can never trust what the government are going to do next. If they don't keep raising the repayment threshold in line with inflation, then lower earners could find themselves paying a lot more.

I'd payed off my loan by the time I was 32. It came out of my salary like an extra tax. It was only about 12k, but accounting for inflation, that was more money then.

Someone has to pay it! If not you then the taxpayer.
If/my kids borrow for education then I expect it to be paid by us/them. Agree with PP who mentioned a moral obligation, this is how I feel. And don’t have a choice actually as we moved to the US and personal responsibility is big over here

Tying yourself to a house and mortgage soon after graduation isn’t something most early career professionals want to do. You need to have the flexibility to move cities and countries. Renting makes much more sense. I don’t know anyone who bought a house until they were coupled up and well established in their field - usually early to mid thirties.

I was 22 when we bought (I was married) and my children all bought in their 20s although some have let out the first property and still live at home but at least they have that toehold in the market.

All DDs friends who are high earners or who have parental money are buying in their 20s. Might as well pay a mortgage when rents are extortionate and they won’t move around. All London based and it will stay that way.

If we want huge numbers to go to uni (difficult to pull up the drawbridge) someone has to pay. Salaries paid to staff are a drop in the ocean! 1.5 million students receive $20 billion a year in loans. £205 billion is unpaid loan debt and this could rise to £460 billion in 2040. So says House of Commons briefing paper from Dec 23. We are paying!

It’s all very well taking the moral high ground when sc train to be solicitors with mum’s company or are going to earn a lot, but many students are unsure about careers and 20% don’t get grad level jobs. Plus what do we do about musicians, artists and actors. There are several professions that do not pay back loans m. Should they take the moral high ground and pay in advance? Do we only want rich people going to uni for lower paid work?

The IFS says the lifetime earnings premium is now only 10% for grads so some aren’t getting much of a premium. MN kids probably will. My DD2 won’t I suspect. Millions are now in this category. So should they never get near a uni?

We had money sitting in bank fast losing value (11%) against inflation, we could do something for DS by using that money to pay some of his uni debt instead.

DS dropped out of Uni so it will indeed be a long time before he makes enough money to pay any of the debt he got, back.

@lljkk Thats always a huge risk. Dc pulling out when you have spent the money is never a good feeling. He could still do well though!

We make money work a bit harder for us with various investments.

"Moral high ground...>" It is only tongue in cheek that I suggest my saving the tax payer the costs of funding and of my children who might never repay a loan is a socialist style major gift to the nation as it were, like choosing to pay a lot of extra tax to help the state help the poor..... the reason I paid was so they would be in the same position I was in - graduate without debt and the principle of our parents that they paid for our education.

I would prefer the state returned to about 15% of teenagers only going to university. It is unlikely we will go back to that.

How are they managing this. I have a plan 1 and I am a teacher. 11 years on and I still owe 40k 😂

They did the standard 3 year degrees coming out with £24k loans on plan 1, and most of them earn £40k - £50k now as teachers. The repayments go up a lot once you hit £40k salary. How did you come out with £40k loan on plan 1? I did a masters so 4 years and came out with £30k loan.