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Higher education

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Original poster

student finance - what happens in this case?

29 replies

Spookymcspook · 04/06/2025 17:03

It's not really my business, but we've recently done the student finance application for dd, and I am curious 😂

A good friend of mine is from a very wealthy family. She and her husband don't work and live off their savings/investments. They have twins who will be coming up to uni age in a couple of years.

Obviously they might decide to go ahead and pay all tuition fees and maintenance costs themselves. But say they didn't, and applied for loans anyway. What happens when you have to declare household income?

If I'm right you have to declare your annual salary on the form - which in my friends' case is zero?! Surely it can't be right that this could potentially put a struggling family on a 30k salary in the same bracket as someone with hundreds of thousands in the bank?

OP posts:
2024onwardsandup · 04/06/2025 17:04

Doesn’t it ask for taxable income? Investment returns would be taxable income.

but yeah I’m sure there are loopholes

Ginisatonic · 04/06/2025 17:11

They can opt not to declare income and the student children will be able to have the minimum loan.

HEstufinadviser · 04/06/2025 17:11

Yes, it's taxable income so that will include interest on savings and income from dividends, etc.

I've come across some students with a £0 household income and the reason it's so low is because the parent's income is child maintenance which is not taxable income (for the recipient) because the person paying the child maintenance has paid tax on it. That doesn't necessarily mean that they have a high household income, of course, but when coupled with an expensive private school background it does make you wonder!

However, most of the time, if household income is really high, they'll usually choose not to take out loans at all. £25k a year (which would cover tuition and leave more left over for living than the maximum Maintenance Loan) would still be cheaper than the most elite private schools so is easily affordable for some parents.

AelinAG · 04/06/2025 17:14

It’s any taxable income but there are certainly ways round it for the very wealthy - as with everything else

somejust · 04/06/2025 17:22

Surely it can't be right that this could potentially put a struggling family on a 30k salary in the same bracket as someone with hundreds of thousands in the bank?

Well, yes but I'm not sure what your problem is? It's a loan, not a grant. The aim is for it to be paid back, through the recipient's income when the threshold is reached. So it might not be 'right' (or fair) that on going to uni, your friend's kids may have more disposable income than the 30k kids, but that's what happens to kids who have wealthy parents anyway, even if they don't take out the full loan.

And the tution loan is the tutition loan, so no student sees that - wealthy or poorer, that goes straight to the uni.

Even if there was some pot of money which would be more if the haves didn't 'take' from the have-nots, it wouldn't really make a difference to your scenario of not being right, as many wealthy folk pay for the tution and don't take out any maintenance loans so it would balance out.

SheilaFentiman · 04/06/2025 17:22

What’s the issue? The minimum loan is available to everyone, it’s repayable at a sensible interest rate - it’s not a grant.

ElliotNess · 04/06/2025 17:25

somejust · 04/06/2025 17:22

Surely it can't be right that this could potentially put a struggling family on a 30k salary in the same bracket as someone with hundreds of thousands in the bank?

Well, yes but I'm not sure what your problem is? It's a loan, not a grant. The aim is for it to be paid back, through the recipient's income when the threshold is reached. So it might not be 'right' (or fair) that on going to uni, your friend's kids may have more disposable income than the 30k kids, but that's what happens to kids who have wealthy parents anyway, even if they don't take out the full loan.

And the tution loan is the tutition loan, so no student sees that - wealthy or poorer, that goes straight to the uni.

Even if there was some pot of money which would be more if the haves didn't 'take' from the have-nots, it wouldn't really make a difference to your scenario of not being right, as many wealthy folk pay for the tution and don't take out any maintenance loans so it would balance out.

Exactly this. When I was a student many moons ago, at least two students (mates of mine) from wealthy backgrounds took out the student loan just to have party money. They were quite relaxed about repaying it as they knew they’d end up in well-paid jobs due to family connections.

Original poster
Spookymcspook · 04/06/2025 17:37

Thanks all!

@somejust - maybe I should have said maintenance loan/grant in context of this. Aware the tuition fees are the same for everyone regardless of income, but the maintenance grant/loan is.

If I recall correctly the cutoff for receiving anything above the minimum maintenance loan is an income of about 60k...but what happens if you have NO salaried 'income' as such, but a lot of savings and investments you live off? Just wondering if it still counts...

OP posts:
poetryandwine · 04/06/2025 17:59

Spookymcspook · 04/06/2025 17:37

Thanks all!

@somejust - maybe I should have said maintenance loan/grant in context of this. Aware the tuition fees are the same for everyone regardless of income, but the maintenance grant/loan is.

If I recall correctly the cutoff for receiving anything above the minimum maintenance loan is an income of about 60k...but what happens if you have NO salaried 'income' as such, but a lot of savings and investments you live off? Just wondering if it still counts...

Yes, parents’ taxable income including interest, dividends, etc must be declared and sometimes evidenced when applying for anything beyond a basic maintenance loan.

Of course this excluded ISAs, payments on gilts and other tax free investments, but that’s life.

Dearover · 04/06/2025 20:21

Income from savings and investments counts, so the loan available would depend on the level of their investment income.

A colleague did this & his DS received no parental support but did get the max maintenance loan. The interest piled onto the debt. When their DS failed his 1st year exams, he also failed to tell his parents that he dropped out. He continued working at a local takeaway and his parents assumed he was studying online. 2 years later they asked about his results and graduation. He told them that as they had manipulated their income to their advantage he felt under no obligation to keep them informed.

ParmaVioletTea · 04/06/2025 21:13

If I'm right you have to declare your annual salary on the form - which in my friends' case is zero?!

Huh??? What a weird question. The taxable income from their investments is income. Salary is not the only form of income. Maybe you don't understand how people derive income from investments?

Original poster
Spookymcspook · 05/06/2025 07:19

Thanks everyone!

@ParmaVioletTea - of course I understand how people derive income from investments 😂- but this is different to a salaried income. I didn’t know if parents have to declare all sources of income, or just their salary - that’s the entire point of the question!

OP posts:
FiletMignon · 05/06/2025 07:25

I am pretty certain the parents have to put in their NI number and the system pulls their income tax statements automatically, so all forms of relatable income are visible. Of course they could choose to not enter their details at all but then the dc would only get the minimum maintenance loan

blametheparents · 05/06/2025 07:31

If they’ve got that much money, you’d think they’d be paying the tuition fees and maintenance directly.
I appreciate that’s not the question asked! But, anyway! It would be a poor financial decision to get loans.

SheilaFentiman · 05/06/2025 07:37

blametheparents · 05/06/2025 07:31

If they’ve got that much money, you’d think they’d be paying the tuition fees and maintenance directly.
I appreciate that’s not the question asked! But, anyway! It would be a poor financial decision to get loans.

They may well do just this - the kids aren’t yet of uni age :-)

Radiatorvalves · 05/06/2025 07:46

@blametheparents some wealthy parents will want their children to understand how much a degree costs and share that load. And not think that the bank of mum and dad can pay up.

FWIW we could afford for our DS not to get a loan but he got the minimum amount. He’s also got a part time job and (post exams) is earning as much as possible so he can enjoy his third year abroad.

HarrietBond · 05/06/2025 07:50

If I could afford to pay all the costs for my child I would, simply because the interest rates are now far higher than they used to be on student debt. I’m hoping to be able to, but I will only be supplying a basic income so they’ll need to work too to pay for a more exciting life.

In my old old day when loans had a far lower interest rate my best friend took them out and saved them to give her a flat deposit as she didn’t need them to live on. It’s always happened but I’d say modern loans aren’t the same value.

minnienono · 05/06/2025 07:56

You have to declare your income to get the higher amount, this includes investments, everything that is taxable. If they are drawing down because their investment income is under £25k a year they can apply but they more than likely won’t bother with the paperwork. I did it one year for dd2 and didn’t again (I my exh had left me so I was low income that day, i didn’t have to declare savings just all income)

jeanne16 · 05/06/2025 08:14

Have friends who are both retired and sufficiently wealthy that they live off their investments. They haven't taken pension income yet as they don't need it.

Both their children get maximum student loans as their parents have zero income, supposedly. I was shocked by this as well.

Of course the children will have to pay back their loans.

MCCN · 05/06/2025 08:16

It depends. If a rich couple is living off their savings in ISAs (which are tax-free) then they will have zero taxable income. Their child would be eligible for maximum student finance loans.

However I wouldn't be too worried about it. As others have said, it's a loan not a grant, so their child will be paying a % of their income towards it for the next 40 years.

There are always discrepancies in the tax system. I can think of lots of others which seem much more unfair than this to me!

alsohappenedoverhere · 05/06/2025 08:21

Spookymcspook · 05/06/2025 07:19

Thanks everyone!

@ParmaVioletTea - of course I understand how people derive income from investments 😂- but this is different to a salaried income. I didn’t know if parents have to declare all sources of income, or just their salary - that’s the entire point of the question!

No it’s not. I doubt they will take the loans anyhow if they are as rich as you say but if they do their dc will be saddled with paying them back so not sure what the problem is. It’s all a big con anyhow, rates should be reduced to inflation only and everyone should be expected to pay back, albeit at an affordable rate. Some people pay back many multiples of what they borrow and the loan is still not cleared as they can’t keep up with the interest rate.

blametheparents · 05/06/2025 08:35

Radiatorvalves · 05/06/2025 07:46

@blametheparents some wealthy parents will want their children to understand how much a degree costs and share that load. And not think that the bank of mum and dad can pay up.

FWIW we could afford for our DS not to get a loan but he got the minimum amount. He’s also got a part time job and (post exams) is earning as much as possible so he can enjoy his third year abroad.

Fair, but the interest rates and loan terms on student loans are terrible.
Most young people are going to pay back way more than they ever borrowed, and still not clear the debt plus interest.

Another option for a wealthy family would be to loan the student the money themselves and at least provide better terms!

somejust · 05/06/2025 10:06

I'm not sure why parents would choose to saddle their kids with debt from the get-go if they had the choice not to, but if your wealthy friend wants to do that, then more fool her, I guess. Perhaps it is a cash-flow issue? Perhaps she wants the kids to understand they need to work to repay things.

But this is not a situation where your friend is gaming the system at the expense of those less well-off. These aren't benefits. The expense is on her kids. Indeed, on their behalf, that might be the 'can't be right' part of your query.

Radiatorvalves · 05/06/2025 12:39

blametheparents · 05/06/2025 08:35

Fair, but the interest rates and loan terms on student loans are terrible.
Most young people are going to pay back way more than they ever borrowed, and still not clear the debt plus interest.

Another option for a wealthy family would be to loan the student the money themselves and at least provide better terms!

Show quote history

True. That’s an option which I’m sure others will take. Depending on how things go in the future we may be able to help pay off some… eg if we get an inheritance, but we will have to see what sort of career he pursues and whether we actually inherit anything!

Comefromaway · 05/06/2025 12:42

I have to declare dividends and on ISA interest on savings.