It's normal to have a student loan isn't it?

[elliejjtiny]

Dc1 and dc2 have student loans as we did at university and most of my friends did. I think there was one girl whose parents paid for everything and then bought her a flat at the end of university but she was the only one. We visit them, take them out for dinner and do a food shop. I've found out a relative has saved enough money for their children to go to university without having to pay anything and then enough for a house deposit. The dc aren't even teenagers yet. That's not normal is it?

Mine is taking his tuition fee loan, and I’ll be paying it back in full before he finishes. He is just taking it for my cashflow, it allows me to finish paying a loan I have, before moving that payment towards his tuition.

If you can help them avoid the loans then you should, but I don’t think it’s a huge issue if they have one.

It's not typical now, but I actually think it will become more so in the future. The furore over student loan debt, Type-2 loans, mis-selling, etc, means - I think - that more parents are going to start planning for University costs from birth or earlier. I suspect we'll move towards a US-type system where tax-deductible investment products will be available from birth, specifically for this purpose. At the moment, those who can go entirely loan free tend to be from wealthy families. Tuition fees aren't going anywhere, unfortunately, and loading the debt onto young people isn't sustainable. The increasing realisation of this, and a reduction in the graduate premium, means that fewer will go to University, but of those, more (I think) will have had parents who've been setting aside money for this purpose for multiple decades.

Depends what you consider to be a 'huge issue'. If your child is on track for a high-paying profession where they'll pay off the debt promptly, then yes, perhaps not. But I would consider a 9% effective additional income tax for the majority of their working lives to be an enormous issue.

We have paid DD’s and DS1’s uni fees and living expenses. When we were paying for childcare (until DS2 finished primary school) money was more tight but we were able to save it a bit in the 2 years between DS2 finishing primary and DD starting uni.

For those paying private school fees or a nanny - university isn’t any more - so it will be normal for some to manage this. Having enough for a house as well is something else.

GP paid for our DC tuition fees, we lent them the equivalent of the maintenance loan interest free (and paid their rent) and they are paying this back now they are working. So they were very lucky and never had student loans.

I know a range. Some do, some don't but ultimately uni is cheaper than many private schools.

Scotland here and government pay fees (lucky us!) so no loan for that. Dd didn't take out any other loans as we financed 1st year and she had summer jobs that financed subsequent years.

The majority of students take the loan. You'll get a skewed response on this board.

How can that be done? The tuition fee is paid directly to the institution I think.

Most people do - but a fair number don't. Remember that if the parent has been spending £30k a year on school fees up til now, paying £25k / year for uni is not going to be a stretch.

Mine had loans, dd2 has paid much of hers off, good job, dd1 will never pay hers off i suspect

I know a lot of people who stretched for private school and their children took loans for uni. My DDs went to private day schools in London for secondary school. The majority of parents at both schools had their DC take loans. There was a significant minority who paid for everything, but even among this group, it was still a minority.

According to House of Commons Library research https://commonslibrary.parliament.uk/research-briefings/sn01079/ - there is a table on 'take-up' rates that shows proportion of eligible students taking up loans which is typically 90 to 95% depending on whether it is just tuition fee, maintainance fee or combined.

It’s normal if you can afford it, yes.

Yeah that’s right. They pay the uni, I pay them. You can start paying it off as soon as you take an instalment, you just long onto the site to pay.

I've got a friend who has saved up for uni since his kids were born. Neither will need any loan for student fees or maintenance for their entire course.

Separately, I know a handful of people who have affluent parents or other relatives who are paying for their grandkids/nephews & neices etc.

The mood music around loans is changing as graduates discover the relentlessness of paying 9% extra on income when mortgages, childcare, loss of child benefit, loss of personal allowance, more and more people pushed into 40% tax bracket etc etc and they still see their student debt growing. The idea that it doesn’t matter/you won’t pay it back unless you earn a lot is less accepted.

Unless universities go back to being free for students and maintenance grants are reintroduced, the scales will skew more in favour of parents/grandparents funding university rather than holding onto a family house/paying into pension/saving which are all going to be heavily taxed.

My dd is just getting a loan for the fees, between her grandmother, her own savings and me helping her we’re trying to avoid the maintenance loan.

I had this deal with mine…I’ll pay uni and you can stay at home while I pay for your car etc (until he gets a part time job that’ll cover it and give him some spare money) but only if he doesn’t take a maintenance loan.

@Girliefriendlikespuppies and @Boreded when I looked into loans vs paying out of DD's CTF for fees and maintenance out of income the sums seemed to indicate that taking any loan would lead to the 9% tax and interest from day one so we decided it was all in or all out rather than half in or out.

With hundreds of pounds interest added in just first year for just the fees loan, then by year 3 £1,300+ interest it seemed the interest for just the fees could (depending on salary levels) outstrip repayments so potential to be an ever ending debt for 40 years, regardless of whether there had been scrimping for the maintenance loan.

As I linked to further up thread the data shows that typically only 5% pay all fees and all maintenance themselves without taking either loan if they are eligible. We are fortunate through a combination of factors to be amongst that 5%, but know that is not going to be remotely possible for the vast majority.

I’m going to be paying my DS’s off steadily over the 3 years…it will cost (if inflation increases by 1% as I built in a cushion) a total of £245 interest. Which on 30k over 3 years is perfect for me as it means I don’t need to extend my mortgage to pay or to take a loan myself.

there will be points where I have more money in the bank than is owed, because the instalments go to the uni 3 times a year, and as soon as the payment is made to the university, I will log in online and pay off all that I have put aside immediately, then add my additional monthly payments to it.

it will never get to a point where my son has to pay 9% of his income (over the threshold) as I will have cleared it before then. And other than that I’m not sure what you mean by 9% tax…I assume you were talking about paying out of his income.

If anyone on here is unsure about how much you would pay doing it this way, let me know how much you would plan on paying/saving each month, and how much you’d take as loans, I can do an amortisation schedule with interest estimates.

I'm 45 and still have my bloody student loan! I pay about £15 a week on it.

@elliejjtiny I am doing what your relative is doing, but I haven't told anyone in real life. I'm well aware that it might provoke the sort of reaction you have had and therefore be social death in my friendship circles.

My DC1 went to a London uni where he made friends with lots of international students and ex-private school students. He said nobody talked about their fee status. However, he did have some friends who boasted about using their free overdrafts to invest in the stock market, which implies they weren't exactly on the breadline.

We could have paid for our two without them taking loans but it would have taken the majority of our savings and we never seriously considered it. One will have a decent but not huge income and will probably just about pay it off. The second has developed a health condition and will probably never work more than part time and quite possibly not at all for most of their life, so is unlikely to pay much back. It’s a gamble. I know very few people who could have afforded the expense so most take loans.

We have agreed with DS that we will pay his rent, his GPs will pay him a monthly food allowance and we will also pay his fees. He will pay us back the student loan amount when he is working. It will be tight but we want to avoid him using a loan company at all. We will do the same for DS2 who is 5 years younger than him.

He just needs a part time job for the fun stuff.

My friend is paying her DDs fees, rent and food. There is no way we can afford this. Our DS is happy with the arrangement we have offered as he was stressing about paying off a high interest loan.