Paying university fees with a credit card

[PrunellaModularis]

Anyone done this?

DD is going to be living at home for her final year so won't be taking out the maintenance loan.

I'm thinking of paying the tuition fee with a 0% credit card then repaying it over the interest free period of 3 years. Can this be done? Is it a good idea?

Nope

Pay it with the loan, it is a graduate tax not a loan as such

Are you saying nope - it can't be done?

The latest plan isn't written off for 40 years- that's a long time to be accruing interest and paying it back if you earn decent money.

We do. We get the points on the spending.

Does your DD already have loans? If she doesn't, your plan sounds great.
If she does, she'll be paying them back for 40 years whether you take out an extra loan or not. The amount she'll pay back won't change depending on the amount borrowed. You'd have got into debt for nothing.

What she'll pay back entirely depends on her future earnings but I think it's the case that the amount people will pay back has near doubled for many (that no-one has really noticed or talks about).

But it mostly depends on how much she ends up earning. It will be a waste of money to pay her fees if she's a low earner for most of her career, but not if she earns more. But I think graduates now have to repay from NMW pretty much, so everyone will repay something unless they work part time/not at all.

Moneysaving Expert has a good analysis that's worth reading.

Moneysaving Expert has a good analysis that's worth reading

Has it been updated for the latest plan? I know Martin Lewis was very much "it's a graduate tax" but I'm not sure that applies anymore.

i dont think it is recommended
it is for the graduate themselves to pay via their tax code.

plus what if she flunks/changes her mind

Oh god I wouldn't. Don't get into debt over this.

This doesn't affect me personally but it's an interesting question, why wouldnt it be recommended if the circumstances worked for the OP. The graduate could still repay the parent on agreed terms, having an ctual student oan isn't a requirement is it?

It seems like something worth considering

If she does, she'll be paying them back for 40 years whether you take out an extra loan or not. The amount she'll pay back won't change depending on the amount borrowed

Help me with the maths - please 🙏

So she's done 2 years @ £9,250 = £18,500
Plus one year abroad @£1,600 = £20,100 plus 3yrs maintenance approx £15,000 = £35,100 (bloody hell!) with interest accruing from day 1.

So would it make sense not to add £9,250 to the above amount?

I agree with you, id put it on a credit card at 0%. Some people are quite happy with paying the interest and park it in an area of their brain but I can't. If she's in her 3rd year it doesn't sound like she's dropping out so worth doing.

If your DC is likely to have a decent career it makes sense to pay all their uni costs as that is far cheaper than the amount they will pay back over the years when interest is accrued.

If they are not likely to have a decent career and pay back more then I’d suggest they shouldn’t go to uni at all.

If your DC is likely to have a decent career it makes sense to pay all their uni costs as that is far cheaper than the amount they will pay back over the years when interest is accrued.

If they are not likely to have a decent career and pay back more then I’d suggest they shouldn’t go to uni at all.

She'll be paying the same monthly amount whether you put 9 grand on your credit card or not, so it's pointless. You either cover the entire cost of the degree (for those who have 60,000 spare!) or she takes as much loan as is available - there's zero point in doing anything else. It doesn't work like a normal loan where it's good to chuck as much as possible at paying it back to reduce it down. The amount she pays back will be based on how much she earns. Maybe it would mean she would clear it a few months earlier than she would have done, when she's sixty-something.

Fees have gone up this year. If she started in 2022 the she won't be on the 40 year pay back term.

You would have to ask the university of they accept credit cards. Can you even get one with a big enough limit and 3 year term? What would happen if you needed the money earlier if you don't have savings?

As others have said it really depends on future earnings. If she goes into a high paying career after graduation then it may be worth it. If she doesn't, takes a career break etc then the amount she pays back doesn't increase if she borrowed more.

In general taking on a potentially high interest debt to avoid a low interest debt owed by someone else even if she is your daughter doesn't make sense.

£40k salary seems to be the tricky point. Where they're paying quite a chunk in loan repayments but (because of the interest) aren't paying it off.

Student debt is a funny one.

If uni makes no difference, then you hardly pay anything back and the state has paid for nothing.

If you end up successful, the amount you pay back is eye watering and paying upfront would have been better hands down.

It’s almost like the current system of allowing literally ANYONE to go to uni rather than it being earned has failed as a project.

Fees have gone up this year. If she started in 2022 the she won't be on the 40 year pay back term

No, she's on plan 5 or whichever one is 40 years. She's in the 3rd year of a 4 year degree.

Can you even get one with a big enough limit and 3 year term?

Yes. And we've got the cash, I'd just rather it was earning interest.

Your DD will be making exactly the same monthly repayments for the foreseeable future whether you incur debt on a credit card or not. What is she planning to do after graduating? The graduate jobs market is very tough at the moment and she might need help in other ways.

People saying it's a graduate tax and you pay the same however much you take out are completely ignoring the length of the repayments. The reason there is a common misconception that "most will never pay it off" is that the interest mounts up so quickly that the debt is increasing rapidly and so you can never catch up - not that you won't ever pay back what you have borrowed.

We put it all on the credit card to get the points/cashback - we then pay it off. Our DC then repay us as the "loan provider". we are obviously lucky in that we have the money to do this (we are used to paying school fees and university costs us about the same).

@3bluellamas but that is different, OPs DD already has a massive loan.

Your DD will be making exactly the same monthly repayments for the foreseeable future whether you incur debt on a credit card or not

I see what you mean (or at least, I think I do!)

Say DD earns £40k at some point. She'll be paying 9% of her earnings over £25k. So she'll be paying 9% of £15k = £1350 pa regardless of whether she owes £30k or £40k (not including interest)?