Disagreement about level of student finance needed

[lurchersforever]

DS and I disagree about what is doable so I wanted to see what others think.

He is going to uni this year and has the maximum loan. I also think I could manage to give him £300 per month. His rent is £6000ish. He has around £20000 in savings/CTF/gifts from GP etc. So he is in quite a good position. We considered him not taking the full amount of the loan as we are aware on the new plan it will all most likely be paid back but ds is highly likely to want to do post-grad study etc so the plan was to take it, put a good amount into ISA and a stocks and share ISA for these future plans. On his course he will not be allowed to work term-time but will obviously be looking to work next summer and has done this summer too, though not a huge amount.

We had another discussion yesterday and I said he should basically be locking away the £20k and living off the loan/what I give him. He started saying he wouldn't be doing this, it was miserable and he didn't want to be limited to this. It really took me aback. He's very responsible, doesn't drink or do expensive stuff. Goes out a lot but not drinking or driving means it's not expensive - couple of AF pints and a bag of chips type stuff! He did go on a lads' holiday for 5 days which he paid for but other than that his socialising is on he cheap.

I'm worried he's going to fritter this money away and if so, maybe rather than me giving him more maybe I should save with a view to helping him out down the line if needed, which I would anyway if I could but I'm not on a huge income and as I approach my 50s I don't want to be thinking I'm having to support him through a masters etc.

He's very sensible normally and we have very little conflict so this has come as a shock. The final comments were doesn't expect me to give him the £300 but he doesn't want me to control what he does with the £20k - he has no intention of blowing it all but it's not my business! What would you do?

I’d get a Time Machine, go back and not save enough (from not a huge income!) that an 18 year old has 20k in their own name! I know how foolish I would have been at that age.

There’s not a lot you can do - it is his money. You could decline to give him the £300, but that will lead to the £20k disappearing more quickly.

Look, people at 18 don’t want to save all their money, especially if they’ve never had any and they have the chance to spend it on some stuff that they want.

he’s being perfectly normal, if not in accordance with what you want.

my son inherited some money when he was 19 and spent it mostly on guitars and music equipment.

an 18 year old does not think like a much older adult,

if the money is in an account in his name there is precisely zero you can do about it.

To be honest on the max loan, with 6k rent, he should be able to manage on just that, never mind you helping out and him dipping into savings

I think his final comments are right and I’d be going with that tbh
I also agree that he should be able to manage on a max student loan if his rent is only £6k. Max loan outside London is about £10,500pa . That leaves him with £150 a week for food and bills . ( over 30 term weeks ) or £86 a week if you spread it over a year. It’s doable. Mine had less than that left after rent and was ok in first year. 2nd and third year have been topped up by savings (they had about 6k before uni) and savings were topped up by working over long summer holidays. They had to learn to budget *themselves .
I’d buy him a big shop at the start of year and get his room set up with a few nice bits . I’d also maybe pay for train tickets to and from and the odd nice meal if visiting him. That would be it . It would be up to him what he does with his £20k .
If his rent goes up significantly next year/ subsequent years so that he has no student loan left, I’d see if I could afford to help him a bit but I’d be saying (now) that he needs to prepare for that as he might need to use the 20k / work over hols for this if necessary.
He sounds sensible ( up til now) and his last comments sound like he wants to take charge of his own money . Maybe let him have a go managing his own income and savings (so he gets a feel for it for a start) and then help as needed or as you can .
It might go tits up of course but they need to learn this

My DD has a similar amount in savings, but she is absolutely adamant she isn’t going to use it for uni and is going to live off what I give her, which is similar to you (I was thinking £80 a week, plus pay the rest of her rent - hers is 7k a year so topping up the rest of the loan) But she is a very focussed girl who wants to be rich one day so is going to invest some of it and hate wasting money on alcohol! She has a good job that pays well in the holidays and may be able to transfer to uni too.

id be a bit disappointed too but ultimately it is his money - hopefully he won’t spend it all! Maybe suggest he saves half? Compromise.

The max loan should be fine to live off, without 300 a month from you and digging into 20k savings.

Getting 20k when they’re entering adulthood is not good. It happened to my friends son and he has blown through it, not bothering to get a job or apply for internships while studying. So he will finish uni broke and with no work experience. I have savings for DD but in my name, which she knows she’ll get for a house deposit.

You can’t control what he goes with those savings but perhaps there is a compromise he might be willing to listen to. Eg you’ll give him 300 a month top up but he must allow you to put away 10k in a high interest account for him to get back for a house deposit. If he won’t agree to that I would withhold the £300 a month and put that into savings for him- under your name!

My friends teen also blew his inheritance from his GP. Not a good idea to give young people money, it needs locking away.

I think he’s right. He doesn’t expect you to give him £300 a month but the £20,000 is his money now and it’s up to him what he does with it. My oldest is 21 and so one of the first to get a CTF but we didn’t pay anything else in to it at all because it made no sense to me to give a 18 year old a massive pile of cash. Without exception, all of the people I know who got thousands of pounds at eighteen spent it in the next few years, if not straight away. One went to Ibiza the day after his eighteenth and paid for three friends to boot.

They are eighteen. They don’t want to live frugally at university with £20K in the bank.

DS2 has a similar amount from an inheritance. I've strongly suggested he doesn't tell anyone he has it, and to live as "studenty" as possible. But also I do hope he enjoys some of it, as my mum wanted her GC to have a good university experience, which is why she left them it. So I've said, things like going on holiday with friends would be a good use of it, a good bike/new laptop etc etc. Just be evasive about hoe you're funding it.

DS2 is probably the only 1 of the 4 who will go to university and I am dreading DS3 coming of age. But that's not relevant to this thread.

This is why DS' savings are in my name, they are for things like a first car, maybe towards a house deposit (we'll see how they grow he's only 6 but has about 10k so far). I see it that I'm not saving for him as such I'm saving for my future self to be able to financially support him .
He says he's not going to spend it all, you just have to trust that. Make it clear to him that there won't be financial support for a masters and let him get on with it.
My parents couldn't afford to financially support me at all at uni, I took a gap year worked two jobs and saved hard. I worked in term and holidays, I didn't have savings left at the end but that was fine the money was to pay for my life at uni. I'm now 40 and in a very good financial position.

I think it sounds like you’ve raised a very sensible kid, and you can’t control what an adult does with his own money so you should stop trying.

You’ve modelled good financial planning and he will have absorbed those principles from you. Make sure he knows how much masters and post-grad courses cost (££££ unless you get sponsorship and stipend) and be really clear that you can’t pay for him for more than the undergraduate years. Equally, get him to have a look at the costs of private rental and housing deposits, if you haven’t already, so that he understands the realities. Sounds like he will work it out from there. But I wouldn’t fall out with him over this.

If he's going to take the maximum loan and his rent is £6000 you really really don't need to give him £300 a month on top - that is loads! With just the loan, and assuming 12 week terms, that is £123 a week which is plenty. The vast majority of his fellow students will be living perfectly well on much less. Adding £300 per month on top pushes it to nearly £200 a week which is unnecessary. I have one at uni now and one has just finished.

I gave mine £300 a month spending money when he was on MINIMUM loan, and he managed! (We topped up what was required to meet the rent) He worked in the holidays which gave him a bit of a back up fund for holidays/gigs.

Thanks all - these are mainly reassuring in terms of how he will manage at uni.

I will feel bad not contributing but it does sound like it would be better for me to save the money myself and then he can have it at some point anyway, For me the worst case scenario would be me sending him that and it still getting to the point where he had spent everything within a few years. I don't think it very likely but I really don't want to end up feeling resentful of him.

In terms of the money he has, very little of it came from me so I haven't been able to control that anyway. I also have ds2 to think about. Gifts from GPs haven't been equally distributed (all come from ex's side) and, though I'm told the intention is there, I'm vey conscious that the people involved are very old and so this money can't be relied upon for him. Apologies if that sounds crass but I need to consider the impact on ds2, who may go for a more expensive uni as well.

The maximum loan should be enough, I’m not sure why you are giving him cash on top, especially if he has his own savings to dip into if necessary. In my family he wouldn’t take any maintenance loan at all, work in the summer and Christmas holidays and come out only owing the fees in three years time.

@Ohthatsabitshit Very few dc csn earn £10,500 over the summer holidays and Christmas! That’s why most take the loan and use earnings for top up. Obviously your family find very high paying student employment that’s equivalent to £35,000 pa plus. Mostly not doable.

The DS has some money but spending it at university means it’s not there for a house deposit or even a rental deposit if it all goes. I’d try and talk a bit about the future.

I think perhaps you’ve misunderstood my post. OPs son has enough money not to take out the maintenance loan and to supplement his funds by working in the holidays. In my family that would be what we would advise in his position. I hope that’s a bit clearer.

@lurchersforever I'm surprised so many posters are telling you the max loan is enough to live off. It's generally considered otherwise, but obviously it depends where he goes. Listen to the first part of this podcast which discusses recent findings of a think tank on university living expenses: https://www.bbc.co.uk/sounds/play/m002h9sn

@Ohthatsabitshit He has £20,000 and rent of £6,000 in the first year. Could be more in rent for subsequent years. So all savings should go? He won’t earn enough over holidays to live off. The jobs he might get (and are often hard to get) simply won’t pay enough. If he doesn’t earn much he’s got a free ride for paying back the loan. He won’t pay it back. If he earns loads, he will pay it off. However will he ever get the £20,000 again? I’d use that post university, not in place of the loan.

@punchinWith rent at £6,000 he should manage. He’s got £4,500 pa. Of his rent is more next year, he can try and work to make up the difference.

Not all teens are lacking in common sense and financial awareness. My DD had a lump sum. In her first year she didn't take a loan. In her second year she took a loan and put it in an ISA to gain interest which att was higher than loan interest. In third year she got loan and spent it. After uni she drew out ISA and repaid second year of loan immediately and had repaid third year loan within 3 years as used bonuses to pay off lump sums. She used rest of her lump sum towards deposit on her first house and is now loan free and has been for several years. She worked in Sainsbury's during uni holidays.

I might look at it rather as Op did.

Firstly, I’d say that with £6k rent, the max amount of around £10k will probably be sufficient. He doesn’t need £10k plus £300 per month, regardless of the source.

Where the £10k comes from depends on how much you can afford to support him. He might be ENTITLED to the full loan but if he doesn’t need to take the max debt because you are able to give him some each month, then he can take a smaller loan and have less debt in future. Yes, I know it won’t alter early payments BUT it will reduce how long the loan is being paid off for/when it is cleared and amount of compound interest.

Im always surprised that when parents can afford to partly support their kid, they do and STILL encourage them to take the max loan available, without ever looking into if a smaller loan might be sufficient. Lots have bigger debt than needed.

Re the £20k I think it’s a different issue. I’d see that money as for the future not for funding supermarket shopping or beers. He doesn’t need it to live on anyway as rent is low and he will have sufficient outside of it. You say he’s a sensible lad….well if you run through the finances of what he will have anyway, esp if he gets a summer holiday job, hopefully he’ll see he isn’t going to be hard up anyways

Best advice would be for the money to be put into a different account and the details are left behind at home. No way should it be sitting in his current account…but hopefully it’s somewhere earning decent interest and ideally locked away even in one year accounts rather than easy access. And I agree that it’s best to just not mention to anyone that the money exists.

If he really doesn’t want to lock it all away, can you reach an agreement that he will take an additional £2k per year but leave the rest locked away? As a bright boy, he will be able to grasp that having all of it accessible could mean whizzing through it very fast, with no real gain and a sense of regret later.

Sounds like you need to do some budgeting with him . Rent plus all the other expenses, including going out. Consider more what you might give him and what loan he might take and what total amount he’ll have. As long as he has enough he probably will be happy to leave the £20k behind. I suspect he’s worried about missing out or being poor at uni and sees the £20k as a way to avoid that. But there doesn’t seem to be any reason why

he would be hard up anyway. It’s just that he doesn’t know that.

Where is the money at the moment? Surely it’s not just in his current account.

At the end of the day it is his though. Most would be able to see it’s a good sum for the future if they really think about it. But having it in the current account would make it do easy to waste, even without planning to.

Really appreciate these replies - thank you all.

So the £20k is currently split between an ISA (£12k) and the rest is in his current account/linked savings account. This is because he got the £12k from the ctf and we sorted that into an ISA and then GP gave him some (£6k) and the rest he had saved from work/allowance/birthday money. I want him to add it all to the ISA (it isn't instant access) and he doesn't.

@WombatChocolate In terms of being able to support him and yet him still taking the full loan, this is something we (well, I) have thought deeply about. The reason is the very strong likelihood of his wanting to pursue postgrad study. It means that either he could save the difference from min to max loan and live off the £300 I give him, which is my preferred option, or he lives off the loan and I save the £300 in my name but earmarked for him if needed. I don't favour that because I'd rather save for ds2 in case he doesn't end up with £20k for whatever reason and I need to even things up. However, I realise I'm not being entirely logical.

My worst case scenario is he spends the full loan, my £300 AND dips into the savings. However, to be fair, he has said not to give him the £300 but I'd still prefer that more of his savings were locked away.

Why put it in an ISA when she isn't a taxpayer? It's fine if it was a Stocks & Shares ISA, but if it was a Cash ISA it's usually possible to get a higher interest rate outside of the ISA wrapper.

I’d use it to pay for university. Different people different financial styles.

Just make it completely clear to him that when the £20k is gone it will not be replaced by you, so he had better practice living frugally in order to prevent a crushing shock when he will be forced to tighten his belt. Or he can throw caution to the wind... But once the money is gone, it's gone.