Is it worth using savings to pay my child's university fees and student living costs

[cassieanne]

I inherited £100,000 from my Dad. I won't inherit any more money. I'm in my mid 50s. I'm on average income and work full time. Son going to Uni in September. Is it worth paying fees and living costs ( he anticipates earning £5,000 per year) up front rather than him applying for student finance? He isn't getting a degree that is likely to bring in big money but it's a subject he's passionate about.

No, he'll pay minimal back if he's not a high earner and you should keep it for retirement or a house deposit for ds if you want him to have it.

I personally would look to assist him in other ways (e.g. future house deposit) rather than with his study costs. Yes, student loans are a debt, but the repayment terms mean he'll only be paying an amount proportionate to his earnings, and the impact on his day-to-day life will be minimal - if he isn't earning much, or is between jobs, then it's not an issue in the way paying say a mortgage would be at those times. There's really no other circumstance where he'll be able to access a loan on those terms so he may as well benefit from it in the one situation where it's available.

I think I'd rather buy him a car and/or house deposit. He's no way of doing this himself whereas he can get the student loans for his course.

I'd look at my own pension first.

What is your housing and pension situation?

No, much better to save it for now and help with buying a property. No one pays much on their student loan and then it gets written off, so it’s a waste of money paying upfront. Of course provide top up if the loan isn’t enough.

Yes 100%. Not having to pay student loan repayments every month is a great feeling, people i work with lose so much of bonuses to extra student loan repayments.

Although make sure he does work for his spending money type of thing, yocan pay for lots of it but he has to do his part too

Yes he won't ever end up paying the whole amount back but he'll still be losing hundreds of pounds from his pay every month for his whole working life. Every payrise and bonus he will receive a lot less than he could do without the student loan repayments

I am pondering this too for my DC. I know economically saving it for a house deposit is the best thing to do; but emotionally not having the debt feels so important. Also them not paying 6% extra tax all their lives (or whatever it works out to).

I think I have decided to pay his fees, and he should get a loan for rent and living. So his debt will halve, and there should be a bit left for a small deposit on a flat. After that he’s on his own!

(Having said that I have an excellent pension. So I agree with others I would look to that for yourself first)

No the way they payback is never hundreds of pounds a months.

No. Read Martin Lewis on this issue.

www.moneysavingexpert.com/students/should-i-get-student-loan/

I paid back hundreds a month until last year when I cleared it.

I am.in a similar position (received inheritance and wondering whether to use it for uni costs, although I have 2 DC , one who has a place for this year, and one who hopefully will have the option to go in future)
We would get the minimum maintenance loan but that would likely only cover living expenses so already planning on paying for accomodation. I'm pondering whether to pay for living expenses rather tha get the maintenance loan so the "only" debt is tuition fees.
I heard a radio programme about it recently and the interest and how the debt escalated really worried me. (45k debt became 65k after 5 years)

https://www.gov.uk/repaying-your-student-loan/what-you-pay. @cassieanne

As someone who went to university later in life and is paying back both undergraduate and postgraduate loans its hardly noticeable.
I'd be more concerned that he wants to do a degree in something that won't make him a high earner. What an absolute waste. I was passionate about sociology but recognised I wouldn't earn enough to meet living costs. So I found an interesting degree that did lead to a fairly well paid career.

His whole life is a bit of an exaggeration

The other thing I did think about was paying his loan down for him after he left. I don’t know if it’s possible for another person to make monthly payments? I could afford £150 a month once he’d left university and that would presumably make a good dent in it.

Of course it is, it is dependant on their annual salary

I said whole working life, which is true for a lot of people

Make sure you have enough set aside for your pension and then just help him out by providing enough for him to live off while away.

Have a look at the Gov link and you will see calculated examples.

I would give some as a house deposit because getting onto the housing ladder is incredibly difficult. For uni he can take loans for and pay himself. There are salary calculators online to show what they would actually pay out of their salaries. Currently it is Plan 2 but that will change to a new plan for your son, but it gives you an idea of what they pay. On £40k they pay £95 a month or £1140 a year but it isn't like they suddenly start paying that, it is taken at source so they just have a reduced net wage.

Ds is in his final year, so far he has taken tuition fees of £9250 x 3 and £4.5k ish in maintenance loan and we have paid the rest. So he has roughly just over £41k of debt. Given the choice I would give him £41k house deposit rather than pay his student loan costs. Think about how long it would take them to save £41k for a house deposit.