Should we fund university or give money later on

[Itsalwayssunny1]

Inspired by the poster asking about how much it costs a year to fully fund a child at university; wanting some thoughts on funding. We are a few years away but quite close now, and in the lucky situation to be able to save money towards university so child will not end up in too much debt. I remember when I was at university the loans were cheap and people would take the loans even if parents had money to fund them. But my understanding is the current loans are different. Our thought is do we give child money for university and come out with little or no debt; or do we save the money to help them later on in life perhaps to go towards home deposit.

This is why the save for a deposit is a better option. Starting salaries won't be enough for a house but if you put the £4k max into a LISA then it gets a _1k a year top up plus interest by the time they are 28 they will have at least £50k to put on a house deposit or keep it in for a pensions head start of they don't want to use it for a house. The bigger deposit they have the easier it will be for them to get a mortgage. If you can only afford to pay for one. the deposit is better. It's what we are doing. I'm unconcerned about the amount they borrow through the student loans as they will be paying the same monthly whether they borrow £30k or £100k.

But they will be paying for much longer if they borrow more. So isn’t that a concern - that they might be paying still when their own kids go to uni?

Yes but the interest is added from the start so that unless they are in a very high pay bracket they will be paying off even £30k until their own kids go to University, so it makes little difference. Especially as it's paused if they go abroad which both mine want to do, then it's written off after 40 years. I'm not losing much sleep about the taxpayer paying for this either, as the student loans company have made a packet from interest repayments from students over the years. It's not as if the state has lent £30k and got back £30k. Sometimes people have paid thousands back over what they borrowed and the loan still isn't paid off. Also if you can afford uni fees and house deposit then that's great. But if it's one or the other, Id rather they were paying off a smaller mortgage for 40 years on an appreciating asset. Kids these days will be lucky to get any kind of useful State pension, will get it much later than us and will have to work longer. Their house could be their only asset.

Not sure if the LISA advice is useful for the OP. It is being replaced soon so if their DC are not 18 in the next year or so, then they won't qualify.

Oh is it? Is it being replaced with something? That's annoying. DS2 has just missed out on the Child Trust Fund which I used to fund the first year of DS1's Lisa and he'll miss out on this too!

Yes. For the new system, they only add the bonus at the point of the house purchase. Bad news is that it therefore isn't quite as good a deal as you miss out on compounding interest on the bonus. The good news is that there aren't the same penalties.

Sounds like you know what you are talking about! Do you think it's still worth setting one up now? If so, would it be better to put the max amount in, and keep adding money each year, or just £1 and see what the new version is like?

@Fabfabfab I am in no way a financial guru, I've just been looking at it recently with my 18 year old son. If there is a chance you would want a Lisa, it is worth putting £1 in as that means you can continue having Lisa's after the change over. If you prefer the new system then you can move over to that in 2028. The house purchase price cap is going to be the same for both so it just comes down to which conditions you prefer.

That’s interesting re Germany. My dd has just moved there but says she will still have to pay it when she’s earning above the UK threshold. Where did you get this information please?

@autumnaunt You do have to
pay the loan if working abroad. Cash in hand is probably what they are doing.
A small loan is identical in monthly payments to a large loan! It’s based on what you earn. Doesn’t everyone get this? So job prospects matter a great deal. Many students get minimum wage jobs or no jobs and pay nothing. Doctors will pay! If paying stops any money being available for housing - I’d rethink because rents are very very high.