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?

Yes really normal

Ours didn't have loans. Many of their friends didn't either. However, they were all told to keep it zipped so info may be opaque.

As has been said previously on the thread, uni fees and maintenance were less than their school fees.

The bummer is that DS has moved overseas and is unlikely to return to the UK and dd will do so next year and is then likely to stop working, so neither would have been likely to repay but nobody can say they've had owt for nowt.

Ours didn't have loans. Many of their friends didn't either. However, they were all told to keep it zipped so info may be opaque

The stats aren't opaque and they show that most take the loans.

I expect that most students coming from private schools don’t take loans - when you have been paying 30k+ a year since they were 5yo, why would you stop and have your DC take a loan with such high interest?

I wonder if we will move to a US-like culture where parents save from birth for Uni.

I don’t know a single person who went to university who didn’t have a loan for at least something.

I think it will become more common for parents who can afford it. The debt students end up with is massive.

Ok the official govt figures for UK students for 2023/24 which seems to be the last full data set are:

6% take no loans
4% take only the maintenance loan
7.3% take only the tuition loan

So 82.7% take out both tuition and maintenance loans. (And due to fiscal drag an increasing number of students are only eligible for the minimum maintenance loan.)

These figures self-paying don’t of course include people who immediately pay off their loans on graduating once they think they will be high earners (which is an option Martin Lewis suggested for a while, especially for Plan 2 loans because of the RPI + 3% interest charged for high earners).

That’s kind of sad. You spent hundreds of thousands on them, then they leave you. I would never stop my kids going overseas, we did it ourselves. But grandchildren really miss out.

I don't see it like that. I see it as having brought up brave, independent, successful young people. The world is smaller than it was.

This. I’m paying £30k per child per year for school fees so I might as well keep going for another few years.

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?

Whilst it isn’t normal for the average student I thought it wasn’t the best financial decision to pay for everything up front.

That thought is out date. You need to read the terms of the loan your child will be taking and make a nuanced decision based on how much you think they will earn in future.

There is an underlying principle here at society level that graduate 'debt' needs to be paid back somehow. Because lots of grads haven't earned enough to pay back their loans, other grads have ended up subsidising them by paying back more than their fair share via frozen repayment thresholds and hiked interest rates. If you want to make sure your child pays for what they get, and no more, then the only way is to pay up front.

does the interest change depending on the university do you know? My loan is 21k and the interest about £250 for the year

No.
You need to read the T&Cs for your loan. You will need to know which Plan you are on so you read the right T&Cs.

@TheyGrewUp Living overseas doesn't exempt someone from repaying their student loans.

Check current interest rates as for plan 5 they are RPI only so potentially lower than the best savings interest or most commercial loans.

It's understandable that parents want to protect their DC from debt but most graduates will be repaying loans and a wait and see approach (take loans and save or invest the money with a view to repaying in full once career path is more certain) is the best option financially for most students.

Plan 2 student loans were particularly poor for students and there is a big campaign going on to address the interest being applied on them. I think that attitudes are shifting now with more students staying at home and going to a local university to save on costs etc. and more applying for apprenticeships alongside uni and seeing what they get.
I speak as an academic and someone who works at unis and in this economic climate I would have a good look at the employment prospects for different subjects since the graduate jobs premium has been eroded in my opinion and some subjects aren’t good value.

Yes, I thgt it was interesting from the figures I quoted above that 7.3% take only the tuition loan. Presumably they are mainly staying at home and so don’t need the maintenance loan. That will be an interesting figure to track to see if there is a trend there.

It is also interesting that in total about 18% don’t take the full amount of loans they are entitled to. In any proposals to change the student loan system eg every graduate paying extra tax (rather than the current system where repayments are at least nominally linked to amount borrowed), we might expect significant push back from people who only have modest/no loans as they may end up paying more/twice. And that group of 18% is a lot bigger than the 6%.(Reformers might write off the latter group as “rich”, but harder to write off the concerns of someone who lived at home and only has £30k of tuition debt which they expect to quickly repay.)

My daughter is in 4th year at uni and hasn't got any student loans. We are in Scotland though, so we don't pay tuition fees. And... She commutes so no lodging fees to pay. I didn't want her to have loans but if she had moved out, she would have needed one. The course she does is the only one in Scotland and is very close to us so she was delighted she could commute.

We are fortunate to be able to pay our DC maintenance (Scotland so we pay additional taxes but they don’t pay fees). So no student loans. Not sure if any other my friends have done the same for their children. I think most have student loans. All my nieces and nephews at uni have loans.

I do feel that working class students got a very raw deal on Plan 2 loans. There is a big focus on widening participation and encouraging first in the family to university students, however these students are also the ones bearing the brunt with no bank of mum and dad to fall back on and many seeing their loan sum actually increasing because of the interest. Has a real impact on life opportunities such as buying a home/having children.

It would certainly be unreasonable to introduce a tax on all graduates after the fact. What about Scottish students? International students? Mature students who used savings or remortgaged their house? Students who have already paid off their loans or had them wiped after 25 years? Students entering low paid professions? Students who choose to
live at home to avoid loans?

If a degree gives access to better paid work then surely any tax should just be the usual tax system where higher rate tax payers pay proportionally more of their income as they do now? If it doesn’t then why continue to encourage so many to go to university?

It’s not normal in my life, but is normal where my son goes to uni and we seem to not be the norm.

l

We have done this as well. It has made a tremendous difference in being able to keep our dc loan free as they start uni.

Our DC didn't take loans, as they were lucky (unlucky?) that inheritances helped, and we were able to contribute. I struggled with everyone saying 'it's cheap money - take it', and feel vindicated now.

However, DC1 visited the uni town with CV's before term started, and immediately got a job - about three shifts a week - in a fast food place. This was the spending money. DC2 lived at home, which immediately minimised their costs. So although they were lucky enough not to have loans, they did make decisions that helped their cash flow throughout the uni years.

We also paid in full, another situation where it was less than the school fees had been. And will do the same for second son. First son chose to get himself a job anyway and is saving the income for a house deposit.

We are very conscious this is a position of privilege.