Only applying for student tuition loan

[ThisPerkySloth]

Hello

if we only intend to apply for student tuition loan (hope that’s what called as new to all this), does that mean there is no need for parent income etc information in support of application like there is for maintenance? Is the process more straightforward?

I'm hoping 🤞to provide the full maintenance amount but DCs will have to get the student tuition loans.

👍

That's correct.

DS applied for a tuitions fees only loan a couple of weeks ago. The whole process only took him a few minutes to do online, and nothing was needed from me / DH

He got confirmation of it through the post maybe a week later.

Even if you apply for the minimum maintenance loan (assuming you are in England) you don't need to give parent details it is only if your income is lower and you are applying for more than the minimum maintenance loan.

If you are unsure about funding all the living costs then it’s same process for just tuition or tuition & min loan. No need for parents to supply info. Very straightforward.

Why not take out the maintenance loan? Unless DC are likely to be very high earners taking the minimum maintenance loan is unlikely to make real impact on their repayments.

I would consider taking out the loan and saving the difference for a house deposit. If you put £4,000 into a LISA each year they are at uni they’ll have a £15,000 deposit at the end, as the government add £1,000 for every £4,000 saved each financial year.

Completely agree with @PinkFrogss in terms of investing money for a house deposit rather than their maintenance. Ds has cost us around £5-6K per year to support him on top of his minimum maintenance loan. We did put him in private halls for his second and third year though rather than a house share and it actually cost less for an en-suite room than a house share by a good £30 a week. It all depends on accommodation costs depending which university they are at.

Ds2 should be going this September to a different university, his halls are just shy of £8k that is before food, travel, socialising, course materials. It will be harder for them to get on the property ladder and if you run the amounts they will pay for their loan through a salary calculator you can see how little it actually costs per month.

It depends - for higher earners on £100k 9% of about £75k a year is quite a chunk of money. I do appreciate the 9% is of income over the threshold (not 9% of 50k borrowed or 5% of £9250 x 3 years borrowed) so the sums can be quite complex.

I disagree about taking the maintenance if you don't need to because under the new plan over 50% will actually be paying it back in full. The higher earners will pay it back quickly, the lower earners will never pay it back in full and end up with a write off but mid earners will pay in full, for longer and therefore pay more interest.

If you can afford tuition and to help sub a house deposit don't just take maintenance for the sake of it or "to invest". It is not a financially sensible route in many circumstances.

Yes the tuition and the basic maintenance loan requires no input from you

I just commented as Op has said hoping to fund and fingers crossed. If it’s that tight better to apply just in case child can’t find a pt job or there’s a big yr 2 deposit to pay etc.

Indeed, if it's only that you're hoping to be able to save them taking it, it may make more sense to take it and, if finances are fine, pay off towards the end of the degree. If at that point they've decided that actually they no longer want to pursue a high-earning career, and are going into something that means they're unlikely ever to earn enough to pay off fully, then you might be better not to pay it off at all.

Although interest is added, the new plan has that pegged at RPI, so it will only be (approximately) keeping the loan value the same relative to current prices. As Martin Lewis puts it, imagine it as borrowing 100 shopping trolleys of goods, and what you pay back is 100 shopping trolleys - although the cost in £ of those trolleys will be going up as time goes on.

It's worth having a look at https://www.moneysavingexpert.com/students/student-loans-england-plan-5/

I can confirm that applying for tuition plus minimum maintenance is extremely quick and easy and can be done by the student without your help. (In fact, there is nothing to stop a student from taking the minimum maintenance loan regardless of how much money their parents are offering!)

@PinkFrogss and @PenPotter that seems a possible option / something to consider.

It used to be worth taking out the student loan even if you could afford to fund your child, but after the recent changes to the terms of the loan it's much less obvious that this is the case.

@Spirallingdownwards thanks for explaining, that makes me want to even more use my money instead of maintenance loans regards new plans but my savings plan doesn’t push to the tuition as well. I agree if don’t need it then shouldn’t take it.

@lanthanum thanks for explaining, my lack of knowledge (yet to get up to speed) has led me to assume they can only pay once starting earning. Seems silly now, so it can be paid off once they finish! Using calc they’d get about £7937 plus parent contribution. Or take the minimum, I make up the difference to the max value but gives me more time to save up and pay off the rest at the end? There is one year where both will be at uni so that might help!

so much to consider. Will have to do another spreadsheet or two 😊

It keeps changing. For some cohorts the interest rate was RPI + 3%, which did mean that taking it cost more, but for next year's intake it's back down to RPI. They have, however, lowered the repayment threshold and increased the time before it is written off, which is why a greater proportion of graduates will eventually pay it all off. The most important thing is that you only pay off when you are earning enough - so if you retire before the 40 years is up, you only pay if your pension is high enough. Of course, we have to assume that they will gradually start raising the threshold again, in line with inflation.