Student finance question

[SleepQuest33]

Hello!

DS will be starting uni this September so I’ve started to plan for funds,etc.

I’d rather he didn’t get a large student loan, the compound interest element frightens me!!

If I pay for his course fees, would he be able to get a smaller student loan for rent and living expenses? How does this application work? And more or less how much do they need monthly (city will be either bath or Bristol)

I have tried googling but can’t find the answer to my question, so if anyone knows the answer or can guide me to the right link I’d be very grateful!

There is a great article by Martin Lewis about student loans / fees, worth reading that.

My DD is at Bath, it is expensive. Halls are around £200 - £220 a week, for around nine months. It is a total lottery what they end up with so even if you try for the cheapest halls there is no guarantee to get it.

Second year accomm is cheaper per week but is usually for 11.5 months. So total accomm bill each year is between £8k - £9k. The minimum student loan doesn't come close to that.

Living expenses is going to vary loads, particularly if they are involved in a sport / society that involves any travel or kit outlay. Could probably manage on £100 but £140 was a bit more reasonable given the sport.

The bus pass for the academic year is £480 and unless you want to remain permanently on campus they will likely need it. A lot of the accommodation is in the city so they need to use the bus every day.

So even if you can pay the fees and they get minimum loan you still have quite a sizeable funding gap to fill.

You pay back based on earnings. The amount you borrow doesn't change the repayment but will potentially reduce the duration. Interest is inflation linked so no real increase. Your DC may never pay back in full if they have a low paying job, work part time or take time out to has family or illness. Unless you can comfortably cover both the fees and living costs and help out with a car purchase and house deposit in future just borrow the maximum.

Savings interest is higher than inflation at the moment anyway and it's the cheapest form of borrowing apart from interest free credit cards.

When applying for the loan you can just apply for the minimum living cost loan and avoid the means testing forms.

As @GuestWW says the loans aren't enough to live on anyway unless you are lucky enough secure the cheapest accommodation and live in a cheap city.

He can take the minimal maintenance loan (something like £4500). Then you pay the rest. He just applies asking for the minimum.
Fees are around 9,600 (as they are going up but can't remember how much). A loan will cover these and is not means tested. Maintenance is on a sliding scale but those who have household taxable income over £62k will get the minimum.
Say tuition and accommodation paid for, then the consensus as far as I can tell is kids need about £50/ week for food and socialising etc. Of course some give their kids more, some kids have jobs over the breaks and/or during term time to top up.
Accommodation costs vary greatly from uni to uni, definitely something to factor in, and Bath and Bristol are on the pricey side.
My DD is very worried about the debt but as I don't have the money to pay she will take the loans. If I have a windfall at some point we may indeed pay back chunks of it to reduce it.

The two loans are separate. He does not have to take either. Maintenance is means tested on parental income.

Thank you! That’s all very informative!!!

Thank you everyone. I think I need to clarify the whole maintenance loan situation.

My DD is in Bristol and her hall is £320 per week. September to July.

My DD is in Bristol and her hall is £320 per week. September to July.

Goodness, I hope that is catered. I'm hoping that if DD gets to Lancaster it'll be around £150 max a week.

We have a chunk of cash each for our kids saved over their lives... we could pay their tuition loans but that'd leave them with no house deposits. It's generally considered better to take the loan, and keep any cash chunks you might have for them invested / to use to fund them starting out in life. Unless you have funds to do it all of course (we don't).

Repayment is 9% of salary over the threshold for 40 years or until repaid.

As PP have said, minimum loan doesn't cover rent so dependant on your income you'd have to topup. Our kids will take tuition loans, minimum maintenance loans to live on (£4500 / year, about £100 / week of term time) and we pay their rent, phone bill, odd shops etc. They work part time / over summer to fund their holidays etc. You'll find rent is £6 - £10k pa dependant on the part of the country they're in.

Hope this helps.

...we could pay their tuition loans but that'd leave them with no house deposits.

Indeed; the money saved up can be used for any purpose, whenever you want / it is needed, and can be spent in instalments or in one go. Whereas the tuition fee loan isn't money that the student ever sees, as it is paid directly to the university.

The maintenance loan is different, in that it does come to the student, and is then theirsto spend as they will. And as others have said, if they apply for it at all, the student doesn't have to apply for any more than the non-means tested basic amount, even if they would get a higher loan based on your household income.

I worked out that if the maintenance loan/amount expected by gov (currently £9k ish) had kept pace with inflation it would be nearer £13k. Ds's halls have cost £9k - 2 meals on weekdays only! - and he takes the min maintenance loan so has over £13k which gives (a bit more than) enough.

Nope. Doesn't even include a cleaning service.

Self catered. She gets a room and bathroom and a shared kitchen

My daughters is closers to £13k per year

I paid the fees and rent so my children didn't have loans. It was similar to school fees so I just continued the pain a few more years. However most people do take the loans. If the student is likely to learn over the loan repayment level (extremely likely) the new loans mean many will repay the loan and higher earners will pay it off sooner than middle income ones.

As for what students need once the rent is paid it is how long is a piece of string - some have more money than others. My twins had £150 a week from me for general spending, food etc. That was more than plenty of people.

@Blushingm where is that?

Mine are in or looking at north / north west (we looked at Bristol but with 3 in uni at same time needed to consider rental and cost of living which made it hard to realistically include)

Nope. Doesn't even include a cleaning service.
Self catered. She gets a room and bathroom and a shared kitchen

Dear God! faints

If I could have afforded to pay tuition fees I wouldn't and would much rather have given that chunk of money for a house deposit instead. DCs took both the tuition fee loan and the minimum maintenance loan which is around £4.5k which was based on our household income. We topped up to the maximum loan amount for them so about £5k per year.

Run salaries through a salary calculator to see how much they would be paying back based on different salary levels. As previously said it doesn't matter how much they owe in student loans, they still pay the same amount per month it will just take them longer to do it.

In Scotland so no fees
We pay our DC £1100 a month to cover rent and spends
Also still pay some stuff we have always paid like phones contact lenses

That will depend on which accommodation she gets. The cheapest accommodation with shared bathrooms is about that (start from about £140) Townhouses with bathrooms shared 1 between 2 are mid range and are about £180 a week. En suites are more and studios much more.

We do what lots eligible for min loan seem to do parents pay rent and she lives on min loan just under £5000 a year (Student finance from England)
Her rent is £157 a week none en-suite in uni halls.
They don’t always get a choice, her friend who got in via clearing is paying double in private halls.
Hall costs vary massively.

If you pay his fees and he gets a loan for rent and living expenses (which yes is allowed) then he will end up repaying exactly the same amount, at least in his early career, than he would do if you didn't. Repayments are structured like a tax, they aren't proportional to how much you borrow but to how much you earn - it's 9% of everything over the threshold (which is somewhere in the vicinity of £27k - equivalent to full time work paying around £15ph). If he ends up in a career which doesn't pay spectacularly, just a decent wage, he will only repay a few hundred pounds a year at first and that will not change up or down with anything you do unless you pay 100% of his fees and living expenses.

His repayments will only start exceeding £100 per month once his salary is around £41k. Put that in the context of typical car finance deals being several hundred pounds a month and it's not that onerous. It starts feeling like big money once the salary starts breaking into 6 figures at which point he can afford it.

If he's on track for a really high flying career hitting that big money early then your contributions could help him to reach the point where it's all repaid earlier than otherwise. But if that happens did he really need your help? If he doesn't have a high flying career then anything you do will make little difference to the loan situation, for most normal careers there will still be a balance owed after 40 years (when it is written off anyway) but the same amount of money given for a house deposit could make a huge difference.

If you can afford to pay his fees then I suspect he will only be eligible for minimum maintenance loan which won’t even nearly cover rent and living costs.

better way is to get the loan for fees and you pay his rent and accommodation