Student Finance

[mumtosnchild]

My daughter is currently in Year 12 and we have started visiting uni open days. She wants to go away to university. Looking at student loans though, it looks like she will only get about £5k due to our household income which is around £69k. Halls of residence we have looked at so far are coming in around £8-£9k. How do students manage to pay this if the parents cannot contribute significant sums?

I was kind of under the illusion that the student loan would cover this but it seems the system expects the parents to contribute thousands of pounds to support their child/ren at uni.

I know there is part time work but that is not guaranteed and not sure how much that would amount to.

Help gratefully received as I find this all quite confusing.

I am afraid the state expects families to contribute.
If she is in year 12 she could work both summers before uni and save up.
A lot of students work around their studies to fund themselves.
Some universities are much cheaper than others. Accomodation costs vary hugely. Sheffield is much cheaper than Bristol etc. So if finance is an issue, this will have to be part of her decision making process.
Full time or several part time jobs in uni holidays
Look at degree apprenticeships.

The state does expect the families to pay unfortunately. Our daughters both get the minimum loan amount which leaves us to cover their accommodation costs as otherwise they would have nothing to live on. The student loan debt they will come out with is insane 😬

Yes families are suppose to pay towards it. Has she got her own savings she can use to top up your contributions from a Saturday job she did whilst at school?

My dd gets the minimum loan, we give her £500 a month. That covers her rent and she lives off her loan. She hasn’t worked at university but she did work when she was doing her A levels and over the summer before she went.

My friend’s son gets the minimum but she can’t afford to give him the top up so he works in the Amazon warehouse in the holidays and this pays for all of his accommodation and then he lives off the minimum loan.

My nephew goes to university in London and his accommodation is £15000 a year, three times what my DD’s is so he deferred and worked full time for a year at Aldi.

My DS worked full time in a warehouse in the Summer holidays to top up his income so he didn't need to work during term time.

With her loans DD started Uni with an income of MINUS £6000 which we had to make up before she could even exist.
She hasn't managed to get a job but did have savings luckily and we were in a position to help

Yes I’m afraid you are are what the state classes as “well off” parents so can afford to pay for your adult child’s education. It is hard for parents in this squeezed middle. Our daughters costs were £8500 for accommodation plus we gave her £500 per month as well as meeting her mobile phone so fairly minimal. We also though had to fund a car due to placements which were nearly impossible to travel to which added on another £250 a month. Total was circa £16500 per annum and she got £4500 loan so a balance of £12k. She did work in holidays but that basically funded her clothes and spending when home from university.

im afraid it isn’t easy especially if you have second that overlaps as well

Yes, as everyone else has said, you are expected to top up. Students Loans have not kept up with the cost of living or the increase in accommodation costs. However, that sounds like a high amount for halls. It’s usual for the loan not even cover accommodation but not usually by that much. She will probably be able to find somewhere cheaper than that, though admittedly not as nice maybe. There are other options of course. We did a spreadsheet for each Uni and the associated costs were part of that - including things like travelling to and from on trains/petrol costs. Some places are significantly cheaper than others and so compromise may be necessary. A significant number of our DDs friends went to the nearest Uni and lived at home. We have three in Uni at the same time (combination of gap years, placement years, further study mean there been crossover) and so although we do contribute, part time jobs and excellent, extreme sport level, budgeting have played their part.

My daughter is 5 and we started the uni fund as soon as she was born so that she will have the money needed (she has about £12k already). I wouldn’t dream of trying to fund it as she starts as I’ll be headed to retirement by then. I will expect her to also work and contribute, but yes sizeable parental contributions are expected.

As you’ve not done this she may need to defer starting until money can be saved.

I went to uni before student loans and even then had £5k a year off my parents plus accommodation paid.

Unfortunately, a lot of parents make the assumption that you did... that your dc would get a loan to cover the costs. I don't think the expected parental contribution is sufficiently publicised, so people fail to prepare for it properly. This either results in parents having to struggle to find the money at short notice or in the students themselves being put at a significant disadvantage because their parents won't or can't provide the top up that they're supposed to. It's a mess.

I was fortunate in that I did know how the system works and I was able to make appropriate provisions accordingly. What I hadn't bargained for was dd doing medicine and the additional financial burden that this would place on us as parents, so even the best laid plans don't always work out!

You need to find the money if at all possible. Your dc will be at a significant disadvantage if you don't. And yes, she can work, but depending on where she ends up, she may need to work in any case, to top up what she gets from the loan and the parental contribution. If you really can't find the money, it might be worth looking at whether your dc could live at home and study at a local university, though this is a very different experience for students.

Realistically your DD will need to find a job and start saving, including taking a gap year if needed, if you cannot plug the shortfall. It’s good that you’re having this conversation now.

other things to consider for finances:

• does her course attract a bursary? She won’t be entitled to any of the ones for financial need but some NHS courses have a bursary
• can she go to a cheaper uni? Northern ones tend to have lower CoL
• what are the typical costs of both halls AND private student housing that she’ll be in from Y2 onwards
• are there options for a university she could commute to? Or where she can go into halls for first year and then come home second year to save the cost

Even if you save it doesn't mean your DC will be able to avoid decades of loan repayments. We saved £100 a month in CTF, basically putting away the child benefit. It's now around 32k at age 16. However she wants to do a 4 year language degree and PGCE so whilst it will top up the loan it won't stop her having to take out a loan as I had envisaged. The fees alone will be more than we have saved. Being a language teacher she will likely never pay it off and have a 10% tax on her income for 40 years. I thought we were planning ahead and avoiding this for her.

Yes as others say, you have come up against an appalling (IMHO) anomaly about Higher Ed that is starting to price it out of the range of a lot of families.

• The student loan (even the max) has not kept pace with inflation so it is not enough
• The household income threshold for only getting the minimum is ludicrously low. £70k is hardly a huge household income for two adults
• More and more uni accomm is built with en-suite, so it costs £££
• Student rents are rising and in some places are very expensive

I guess if you chose private education up to 18, and have been paying £30k+ a year without too much stretch (obvs not always the case), then finding £5-10k must seem relatively easy. But for many families it is a real issue.

As others say, there are things you can do. Here's my thoughts:

• Take a gap year or two, save hard and build a cushion (if living at home, should be able to save £5-10k a year even on min wage
• Go to local uni and live at home
• If studying a low-contact degree (Eng lit, history or similar) choose a uni a bit further away but with a reasonable commute and just go in for contact time 2-3 days a week. My DD did this in her final year
• Get a part-time job at uni – but be aware that this may be difficult depending on the place. Not loads of pt jobs in smaller places like Loughborough or St Andrews. And cannot be relied upon tbh
• Look really carefully at the uni accomm and also private rents. Some unis have a greater range, starting at lower fees, and private rents may be less as well

That last point is a big one tho I sometimes feel a bit of a lone voice mentioning it. As a couple of examples – DD was at Leicester (5 years ago) and her halls place through clearing was about £105 pw; just glanced at the uni website and there are lots of halls options in the Village for less than £5k, some even less than £4k. Bargain! Her private rent was less than £100 pw. DS is at Loughborough – again there are a couple of halls with rent around £5k pa. His private rent next year is about £6,300 but that's the most he has paid in four years.

We also looked with both of them at Leeds, Newcastle, Sheffield, Birmingham. All had cheaper halls or at least some that were cheaper; and private rent in a big northern city is often available at a cheaper rate, anecdotally from friends’ DC.

In contrast a friend DC is at UWE in Bristol; their second-year rent for a room in a shared house is just under £10k. Some unis or rather unis in some places are becoming unaffordable for an awful lot of people which is a shame.

I top my son up from minimum to maximum loan. He primarily applied to cheap cities so after rent (which has been between £6.5-7.5k he has about £60 per week leftover.

Yes this is the case. Could she go to university closer to home so living at home could be an option. She could stay in halls in year one and then take a view after that. I know lots of students find year 3 very intensive and want to be home more. It doesn't have to be all or nothing. Otherwise she could take a year off and work full time to save quite a lot if money.

Parents are expected to make up the difference to the full loan amount since it’s their income that’s reduced the loan amount. However, DS has just finished his first year and we’ve paid more than that (not London) plus course trips on top.

My h is retired, I work for the nhs, our household income is around £36k and we still don't get the full loan. Dd is at York where her 2nd year house is costing 850 a month and her halls this year were 1900 a term.

Luckily she got a small bursary from the university as they, unlike the govt, recognised we are actually pretty poor! She also has worked in holidays.
But yes. It's awful. HE becoming elitist again.

Great points from @clary

How much could you reasonably start saving now? You have about 15 months before she starts, so could build up a bit to add to the fund? I'd got to the point where I could start saving a few hundred a month when I realised we would need to top up, so that became my University fund.

As everyone has said, there is an expectation that you top up the loan.

Many students work when they are there, and in the holidays, but that tends to be as well as the parents topping up. As you have found out, there is a top up needed just for accommodation, before you get on to living expenses.

If parents aren't able to top up then another option is for the student to take a year out, and save from their earnings throughout the year.

I have an arrangement with my dc that we will top them up to max loan. They are entitled to minimum as we are, like many, in a Catch 22 where we have to work excessively to cover expenses, which prices our adult children out of any support extra.
I have one child in a cheap northern city - doesn’t work term time but picks up a bit in holidays
Dc2 - London - saved £15k before starting from 6th form job plus a year out - works both term time and holidays - a natural spender but manages well.
dc3 off next September to an expensive city outside of London - worked and saved through 6th form but nowhere near the buffer of dc2 and no guarantee of part time work.
DC4 looking at apprenticeships but it’s early days and if I had to give advice I’d encourage him to follow dc1 and not dc3 who I feel has the worst of all worlds.

I save much more than I thought by not having them at home

I save much more than I thought by not having them at home

This. OP estimate what you’ll save in food, school lunches, bus pass, pocket money, clubs/sports, driving lessons, lifts etc- a teenager at home is quite dear to run.

Yes that is a good and valid point about savings.

Things off the top of my head I stopped paying for (apart from the obvious food):

Music lessons
Social activities like Guides and Scouts, band, many sports, dance class – and also driving to and from
Lunch at school
Sixth form clothes

Doesn't sound like much but DD's music lessons alone cost about £600 pa. I was happy to pay it of course but once I didn't need to, it was helpful.

It wasn't originally elitist, not in terms of finances. It used to be that tuition was paid for by the government, for everyone and grants were given to cover living expenses and rent to those who needed them. I think its BECOMING elitist.

When I was at uni in the 90s I knew a student who saved out of her grant money to send back to her parents who lived on a farm in Devon.

I think probably hundreds of years ago it was probably elitist! Then there was an era where it wasn’t (as you describe) but now it seems to be heading that way again. For someone not to be getting any more than minimum loan when they’re on £36k 🤦‍♀️ when minimum wage is about £25! It’s ridiculous.