Cost of University Sept 2012 onwards - Student Loan or Bank of Mum and Dad - What's going to happen in your house?

[Watertight]

Can I ask what everyone's thinking of doing? Will your kids Student Loan it all the way or are you planning to contribute? If so, what?

As a VERY rough guide, I have been told by friends that the costs could be:

Tuition Fees: £9000 (some unis will charge less but it's not completely clear yet)

The directgov website says that everyone, regardless of parental financial status, can borrow all of their tuition fees.

Then, there's:
Accommodation: £3000-£6000 pa (depends on how nice/where it is/ whether it has its own bathroom/ whether meals are included etc)

and:

"Maintenance" £3000-£4000 (ie books and stationery, travel, beer/ going out, clothes and toiletries etc etc etc. It MAY also include food if your hall does not include meals. - ie, £"How long is a piece of string") Some kids will be more successful than others at living on a pittance.

Everyone (regardless of parental financial status) is entitled to borrow a "Living Cost" loan of £5,500 (outside London) or £7675 (in London) but this (I think) would have to cover accommodation and everything else that I have listed as "Maintenance". The numbers don't add up...

Some students will be eligible to receive a grant (that does not have to be re-paid) if their household income is less than £42,000.

Also, some kids will get part-time jobs and summer jobs to supplement their income.

Apologies if I've got any of this wildly wrong. We're not there yet and I'm trying to get my head round it.

Any thoughts, people?

We live in Bristol and DH is hellbent on developing a grand plan where we move over the bridge to Wales.

jiminy i know, it makes me pig sick to think that my relatives doing noddy degrees will only pay 3k per year and my son doing one that will benefit the country has to pay 9k. purely as a result of postcodes.

This is a major chunk of a letter that an engineer has written to the New Civil Engineer magazine.
I think its rather scarey, and maybe not what the government wants students / parents to hear.

"Imagine a young person interested in engineering is lucky enough to have rich parents and doesn't need maintainance loans, just loans for fees.
Our young friend wants to do a 4 year MEng, so chooses the 4 year course and it is said they will graduate with £36k of debt. It's not true.
The loans post 2012 have an interest rate charged at RPI+3% for the duration of the course, currently 8.3%. assuming the average over 4 years is 5%, the student leaves university with an annually compounded loan of over£40k.
If they're lucky and get a job at £21k/year there is no payment of the loan that year as they are on the threshold rate of pay.
But interest is still mounting at RPI, say at 3%. The first years interest adds another £1200.
Our young friend gets a pay increase the next year to £23k and they paid off £180 of the loan, but the loan increased again a little more than £1200. The net difference is the load increased by another £1120. They would have to earn about £35k before the debt started to reduce at all. What level would the debt peak at?
This is a graduate tax in all but name with a backdoor implementation.
Very few future engineers are going to be able to pay it back in 30 years unless they cut back on afew of lifes luxuries, like ever owning your own home or raising a family. So our friend can look forward to an additional income tax of around 5 - 10% for 30 years"

If the above is true, it is pretty daunting and young people need to consider pretty seriously whether all the degrees on offer are really worth getting into even 3/4 (for a 3 year degree) of that debt for, and remember those calculations were for TUITION FEES only.

Grim. I think the interest issue is very carefully swept under the carpet among all the hype of 'you don't have to pay upfront'.

We don't do debt (cleared our mortgage by living frugally for years), so unless some major disaster happens like we both lose our jobs, we'll fund ds through Uni. Unfortunately he's interested in medicine so I do have concerns that it will be like the mortgage paying years all over again.

I won't be giving him beer money though, he'll have to work in the hols for that sort of thing.

I've been thinking this through and have talked with DH and DC about it and I think that this is where we are:

Ours will borrow the £9k for the tuition fees and £3500 for living costs/maintenance.

We will pay the accommodation - hall or rent - hoping for £4000 pa but accept it may be nearer to £5000. Won't pay a penny over £5000.

I've said we'll also continue to pay for the mobile phone contract.

When they come home for the holidays I will feed them in the house but that's it. They will need to work during their holidays to pay for everything except food eaten at home and to save up for any holiday/festival tickets.

I find the whole thing really depressing. God knows how this will all pan out.

if it is at all possible to do a 'parent loan' rather than take out loans see if you can and I don't mean letting your DC have a free ride - they can still pay you back but why incur interest if you do not have to
my son, when taking his Bachelors degree (only just finished it) lived in a house share from the start - rent was £42 per week , which we paid termly and then he had an allowance of £45 a week to pay for EVERYTHING else, food, gas, electric, clothing etc the only thing we paid for extra was necessary course work books - in the hols. he worked to pay back his 'loan'

anyone else livid bothered that if parental income is below certain level (which I know is very low) then student will have minimum loan if one at all due to unis offering bursaries for part of accommodation as well as fees.

If it's a 'graduate tax' paid by the graduate (grateful for the expensive opportunity to study in the UK) then the student pays out of future earnings, so HOW is your own parents income relevant? Means that some students will start graduate career £40k better off despite potential high earnings, and no fears of bearing loan for most of his/her working life.

We might be able to help ours out by a little (ie: pay some of their fees or maintenance loan to reduce the total debt), but if they still won't pay off the remainder in 30 years due to the interest then it's not worth it at all as the debt is then written off, but they've still had to pay the extra 9% marginal tax for 30 years anyway so we'd be out of pocket for no benefit.

Ds wants to do a 4 year course and doesn't have hugely high earning aspirations (teaching is one thing he's considering for example), so he is very likely to be paying his debt for the full 30 years unless it's very small to start with (unlikely). Dd being female is statistically more likely to earn less than a male and more likely to take a career break (when interest will still accrue), so is statistically less likely to repay her loan in 30 years than a man.

Therefore it doesn't make sense for us to pay any of their loans up-front. More use to save any extra money we might have to help in other ways (deposit on house or something).

Of course if they prove us wrong and earn mega-bucks and are able to pay their loans off relatively quickly then it will have been the wrong choice, but it's not really possible to know this in advance. Therefore I think the strategy of taking the max loan allowed with us topping up to a workable level, them working in the hols (that seems sensible) and if possible us saving a little extra for them too is the way to go.

But I really don't like the idea of the extra tax burden on them for so long. I think it will disincentive them to work harder & earn more as if they do they will just pay more in tax. I think many of this generation of women will feel more inclined to work part time to keep below the repayment threshold too.

I'm hoping to fund dd for 4 years of University. If she wants to do an advanced degree, will have to re-think.

I'm (jokingly) thinking of getting her to take up the bassoon (or some other obscure instrument) as many Universities (here in America), offer big bursaries to students willing to participate in the school orchestra. And though there are many violinists floating around competing for spots, there are hardly any bassoon players.

DD1 is planning to study abroad (Netherlands). She is a fluent Dutch speaker so she should be able to access a full range of courses. Certainly at the moment course fees are far lower than the UK plus if she can find a part time job she will be able to get a grant.

The system there seems to be a lot more sensible than here in the UK.

I think we will probably have to be the bank of mum and dad but I will be expecting DD1 to pay us back.

Earlybird - that sounds like an excellent plan!

Watertight

How having a student loan will affect a mortgage is on the amount of disposable income that can be used for re-payments, thus potentially affecting the amount allowed to be borrowed, but won't stop a graduate from taking out a mortgage as a student loan doesn't go on their credit file.

This website says it much better than I can

oh my ive 3dcs and two are teens both a year apart so will be wanting to go to uni at the same time scary stuff

Loans and grants and part time work. I will help if I can but have 3 young kids.

This is an issue I have been trying to avoid thinking about, but thanks to all of you I am now much better informed. My 3 DSs are 16, 13 and 10 so I really need to get my head out of the sand and start planning! If they all do a 3 year course without a gap year it will be 9 consecutive years of us funding accommodation costs etc. Aargh!!!

Still a way of for us but we have 4 universities local to us so hopefully DDs will do what my brothers and I did, stay at home and I will cook frugally for all of us

My worry is will there be enough part-time/holiday jobs for all those who need to rely on them? Employers know as a student you'll likely quit when term starts, and other than touristy things, a lot of employment needs don't increase in the summer.

During my medical degree I found it pretty difficult to manage a job, especially in the later years when holidays were much shorter - nobody was going to employ me for 2 weeks in July. Even 6 weeks would be difficult. And during term-time when you're in the hospital 8-6 weekdays anyway and have studying to do. Not
to mention the fact that you're sent away on placement for 5-15 weeks. Employers don't usually let you have 10 weeks off.

Obviously sometimes you need to work, but I just worry about the difficulty of this with people relying on it.

As a whole I'd be more inclined to take the debt for something like medicine with reasonable job security than for something else which is possibly not so, but I do think it's slightly different financially as you work more hours and have considerably shorter holidays.

I suppose I do think this system is fairer, but it's also terrifying. And I'm not sure it even saves the government money, but I'm no maths whiz.

In answer to the main question my parents helped me with rent, otherwise not sure what I would have done. If things are still the same when I'm in this situation I'd be
Inclined to do the same, and as someone else suggested save with a view to possibly helping with a house deposit rather than paying fees upfront.

Also wonder about how this will affect families now spacing their children, looking at above comments.