Should we pay off DC's student loans?

[Woollyguru]

I'm having a really hard time trying to work out whether it's worth doing.

DD is graduating this year. She's on plan 2 where the threshold to repay starts at £27k approx, and it will be written off after 30 years. She's got the full tuition fee loan and the min maintenance. So total loan approx £42k

She has a job starting in September which pays £25k in year one rising to £36k in year 2.

She needs to do further training but after that's completed she can reasonably expect to earn min £50kpa which will go up with experience.

I know the repayments will be taken into account when applying for a mortgage.

It's impossible to know her career trajectory and how much she might end up paying back before it's written off. I know in general if you are going to be a high earner and likely to pay it off it's better to pay it off sooner and save on interest.

But the money might be better off going to towards a house deposit.

Has anyone done the maths on this?

You are ignoring the 2012 tripling of fees from £9k for a degree to £27k for a degree and the loss of maintenance grants between 2012-2017 for low income families adding an extra £20k to the costs per child.

A low income family who has saved for their children born in the early 2000s since birth thinking they’d need some £9k per child for Uni and then between. 2012-2017 find out that it’s now more like £47k per child for Uni and their children are now age 12 or older…they’d have to save probably two years worth of wages extra within 5yrs or less.

Impossible on the average income pf £30k/yr.

Their heads were not buried in the sand. They were blindsided by massive increases to the costs for their children to attend Uni over a 5 yr span.

It was ok for you because your DH earned a lot, but those not privileged to earn so much that an increase in Uni costs of £9k for the degree to increase by 422% to £47k over 5yrs - an annual inflation rate of 40%!!

The fees have been higher for 12 years. The dc going to uni now were 6 at the time. They were nor born 25 years ago. I know not everyone can save but the dc getting max loan are able to go and that’s the point. If we want 37% of school leavers to continue to accessing degrees, there is a cost. I do think parents of 18 year olds must have been hibernating if they had not realised fees were higher now. The universities, by the way, want in excess of £12,000 for fees and of course charge at least double that to international students. It’s cake and eat it I’m afraid.

30% of UK families have no savings at all.

Are you saying that only the children of the well off should go to University ?

@Talkinpeace Where did I remotely suggest that? I said I know not everyone can save. Is that not a clear statement? Also just because people have not saved, it doesn’t follow they could not have saved. The full loans are ok if you go to a cheaper uni. They are pretty good if dc live at home. I do think the grad tax kicks in too early but we have to consider the vast numbers we send to uni. I’m a fan of HE but not necessarily expensive degrees of questionable value which mean dc leave home and borrow a shed load.

The full loans are ok if you go to a cheaper uni.
The cheapest two universities are Oxford and Cambridge as they have shorter terms and do not charge hall fees in the summer holiday

They also have huge endowments and vast funds to offer bursaries and subsidise students. No new high rise halls costing a fortune in those locations either. They don’t increase their intake either. So that was left up to the others and all the new universities we didn’t need.

Oxford and Cambridge also typically have enough accommodation to house students for the entirety of their degree, compared to most other universities, where it's only 1 year in uni accommodation

@OhDear111
Who mentioned bursaries ? I did not.
You suggested kids go to cheaper universities.
I named the cheapest two.

@redskyAtNigh
And neither Oxford nor Cambridge enforce 48 week room lets - as is common elsewhere.

@Talkinpeace You know what I mean! Obviously most dc do not get near Oxbridge so it’s a silly comment. As you know. Staying at home, if there’s a decent uni, is cheaper. Many London dcs do this and others are following suit. There’s very good reasons for this. Msny European countries have large local city unis and dc commute. We have chosen another expensive model and moan about it. Surely it’s ok to go to Sheffield rather than have a big loan to go to Liverpool?

A degree in the Netherlands costs 900 Euros a year
its not a comparable system