University Fees & Student Loans

[moorfield]

Am parking this here for now as LF doesn't seem to have a student finances board? Mods please feel free to move this question to somewhere more appropriate.

Moderator Message:
The site owners have seen fit to follow your suggestion. People-power in action! - Chris

With the possibility of Moorfield #1 off to university next year, we are looking into how to approach supporting the fees & accommodation costs, and interested in how other Lemons have done so?

I am looking at different scenarios, eg.
- paying fees upfront and accommodation costs from our savings
- use/take all the loans available, and match the future repayments when they become due from our savings

Any wisdom etc., appreciated.

[ReformedCharacter]

Am parking this here for now as LF doesn't seem to have a student finances board? Mods please feel free to move this question to somewhere more appropriate.

With the possibility of Moorfield #1 off to university next year, we are looking into how to approach supporting the fees & accommodation costs, and interested in how other Lemons have done so?

I am looking at different scenarios, eg.
- paying fees upfront and accommodation costs from our savings
- use/take all the loans available, and match the future repayments when they become due from our savings

Any wisdom etc., appreciated.

We paid for accommodation and living costs. My son took out a loan for course fees and is slowly paying them off, fortunately he has found a job that pays well enough to do so. If you intend to pay for all of it, one way or another, then the interest costs would make the first of your options preferable. You would be unlikely to match the interest rates charged on the loans from savings and investments - or at least I couldn't.

RC

[gpadsa]

tuition fee loan = graduate tax
Even for the debt-averse it is probably worth taking the 'tuition fee loan' then seeing how life plays out for no.1 in the years immediately after the degree. If full & remunerative employment occurs it would be possible for moorfield to help pay off some/all of the 'loan', having only incurred the rather punitive interest charges on the 'loan' for a few years (perhaps having set aside/invested cash for this eventuality). If a career of patchy or low-income work seems possible, graduate taxation would rarely be incurred implying that the 'loan' might expire (many years in the future) with little financial cost to the moorfields.

maintenance loan = living expenses
Wherever no.1 is, whatever they're doing there will be rent, utilities, food, clothing, entertainment costs - if the moorfields can afford it, surely it is better to pay for these as they are incurred rather than get a 'loan' that is paid back as a graduate tax - unless that patchy & ill-paid career beckons.

However if the moorfields fall on hard times & no.1 needs to get some means-tested maintenance grants (free money) from their university, the expectation will be that they've taken out all available maintenance loans before becoming eligible for a grant.

On average a university graduate pays more tax in their lifetime (£100k is the number I have in mind but I don't have a ref for that) so squeezing them for an extra £9.25k pa during the degree + subsequent punitive interest rate does not seem fair to me - and a family unit making plans to minimise cost seems fair to me.

gpadsa

[wanderer]

I struggled with the same dilemma for many months but ultimately came to the conclusion that it was best for my son to follow the herd, take out the loans and as gpadsa says, see where life takes him. In the meantime I am saving equivalent amounts in a LISA and ISA. That means that:

- if he's not a big earner he will never pay off the loan anyway, and he has the money available in the ISAs to save or spend as he wishes
- if it does look like he's going to be a big earner then with the ISAs he will have enough available to pay off the loans, assuming they have grown at roughly the same rate as the interest on the loan.
- if he wants to go on and study further (a masters degree or whatever), then those savings could also be utilised when these is no loan available for support

I think the loans/graduate tax system is really not sustainable (very high and punitive marginal tax rates) and can see them being written off or substantially restructured in future. Best to follow the herd rather than be prudential it seems to me and be in a position to benefit from the graduate debt jubilee, if it comes.

There is a really good article on all this at monevator, which I found very helpful in further rationalising the decision. It helped me realise that the loans/graduate tax have a real option value.

https://monevator.com/student-loan/

I have to admit that I am skeptical about whether degrees represent good value for money at all, especially in the humanities. Even better, in my view, would be to get an apprenticeship at a blue chip company and postpone the degree to later life, and see if it is wanted. Other than in tgescience/engineering/medical spheres, degrees are overrated in my view and are increasingly irrelevant to the skills needed at work. However, my son wanted to go and do his degree, so I hope it works out well for him. He's very much enjoying it as far as I can tell.

[moorfield]

I have to admit that I am skeptical about whether degrees represent good value for money at all, especially in the humanities. Even better, in my view, would be to get an apprenticeship at a blue chip company and postpone the degree to later life, and see if it is wanted. Other than in tgescience/engineering/medical spheres, degrees are overrated in my view and are increasingly irrelevant to the skills needed at work. However, my son wanted to go and do his degree, so I hope it works out well for him. He's very much enjoying it as far as I can tell.

I have written here somewhere already that Moorfield #1 has a school leaver apprenticeship offer from a "Big 4" firm to do ACA. But also now has an Oxbridge offer... which we would be quite happy to fund. No other universities appeal. A nice problem/decision for an 18 year old to have!

[moorfield]

https://monevator.com/student-loan/

... and that's a great read, thank you.

[wanderer]

An Oxbridge place is certainly worth it! I

[Boots]

I have written here somewhere already that Moorfield #1 has a school leaver apprenticeship offer from a "Big 4" firm to do ACA. But also now has an Oxbridge offer... which we would be quite happy to fund. No other universities appeal. A nice problem/decision for an 18 year old to have!

Well done Moorfield #1!

Boots Minor is hoping to go to university in '25. My personal view is that I think the Student's Loan scheme is a rather expensive and inflexible arrangement. I would prefer that my child not start out working life with a large debt around his neck - that's what mortgages are for!

Mrs. Boots and I obviously won't be able to stop him taking one out (not would we want to try to control him in that way), but we would try to persuade him to think about the consequences.

In the meantime I have been saving at a rate such that, if continued for the entire duration of his degree, I should be able to meet all the fees and accommodation costs. These savings are in my own name, but the interest will be within the personal savings tax allowance (so long as that doesn't get slashed). This is probably sub-optimal, but Mrs. Boots and I felt that was the best plan.

[gpadsa]

a school leaver apprenticeship offer from a "Big 4" firm to do ACA

if there was a way to get that firm to convert their offer to a graduate job offer that would remove job-hunting pressure from no.1 in final year provided that the firm & proposed job might still be desirable several years in the future. And if the firm would stump up for a bursary during the degree. probably 'no' on both accounts but it wouldn't hurt to ask

gpadsa

[Dod101]

And of course make sure that the student is one way or another working during term time at least. My granddaughters all work and certainly the two that I know most about are almost financially independent (admittedly they get free tuition in Scotland)

One works in a call centre (well actually she works in her bedroom or where ever her fancy takes her). The call centre is basically an employer provided laptop. Work odd and unpopular hours and, holidays and it is surprisingly well paid.

Dod

[BullDog]

I paid for everything for both kids four year degrees. The proviso was that they actually graduated from a decent university with a decent grade in a worthwhile degree. Mission accomplished and worth every penny.

[Lootman]

I paid for everything for both kids four year degrees. The proviso was that they actually graduated from a decent university with a decent grade in a worthwhile degree. Mission accomplished and worth every penny.

I did not pay everything but I did help out, subject to a similar proviso - the degree had to be in a subject reasonably likely to lead to a real job, i.e. not art history or any form of grievance studies.

[moorfield]

Moderator Message:
The site owners have seen fit to follow your suggestion. People-power in action! - Chris

Thanks Chris!

[tjh290633]

My granddaughter has been doing online tutoring since she was in the 6th form and through her time at university. I gather that it is quite remunerative. It does not seem to have stopped her enjoying herself.

TJH

[ikethespike]

It is very difficult to decide what to do in this situation and it depends on individual circumstances. The goal posts seem to move (as always) and predicting how this will affect financial assumptions for the family/student at the time is not easy.

Martin Lewis provides much valuable information.

I found assessing the pros and cons to be very complex and there were so many incalculable unknowns. In the end we funded the fees and associated costs. Whether this will be prove to be a good decision financially or not remains to be seen. The funds could have provided a deposit for a house purchase or as wanderer says there may, in the future, be a graduate fees rebate. On the other hand, it has reduced the value of our estate. On the positive side, I can say that having completed the process, from a psychological point of view, I feel like a did when the mortgage was finally repaid.

[Lootman]

In the end we funded the fees and associated costs. Whether this will be prove to be a good decision financially or not remains to be seen. The funds could have provided a deposit for a house purchase or as wanderer says there may, in the future, be a graduate fees rebate.

Good point, Biden has been promoting student loan forgiveness recently and perhaps a future (popularity seeking) Labour government might also.

Or your kids may decide to emigrate when, in practice if not in theory, any student loan is unlikely to ever be repaid.

[thebarns]

My eldest is in his final year at Scottish University, after going to private school since aged 5 - actually very common in the particular Scottish City which could not cope with all those at private school going to state education.

Scottish Uni fees are free - although the government severely restricts to Scottish Students via funding - all 170 Scottish students at this year’s Edinburgh University Law intake came from the lowest 40% affluence Scottish postcodes. So it’s not as free as everyone assumes as many Scottish students can not get into their Scottish University or subject of choice due to, ahem….social engineering….amongst many other issues that are generating publicity for Scotland just now…

So I paid his accommodation cost for 4 years and he took the maintenance loan to cover other Uni living costs.

His first graduate job will already be over the threshold at which he has to start repaying the loan via a 9% additional tax charge.

Scotland, in its infinite wisdom also has a far lower threshold for higher rate tax - £43k v £50k in England - so by the time he hits that salary he will be paying a marginal rate of tax, including NI, of 42+12+9=63% !!!. His degree and graduate job is very portable so I suspect he will be leaving Scotland in a few short years, with his father’s blessing.

I have a tiny bit of knowledge of ACA scheme at 18 or 21/22 when a graduate - unless your child is really adamant they are the sort of person that wants to work straight from school, I’d advise Uni and then ACA. If they were good enough to make the grade for the school leavers direct scheme, they are very likely to be good enough to make the graduates scheme for a BIg4- they all do their own assessment and testing.

[Lootman]

the government severely restricts to Scottish Students via funding - all 170 Scottish students at this year’s Edinburgh University Law intake came from the lowest 40% affluence Scottish postcodes. So it’s not as free as everyone assumes as many Scottish students can not get into their Scottish University or subject of choice due to, ahem….social engineering….amongst many other issues that are generating publicity for Scotland just now…

Good grief.

Moderator Message:
Edited to remove offensive remark. --MDW1954

His degree and graduate job is very portable so I suspect he will be leaving Scotland in a few short years, with his father’s blessing.

I do not blame him or you at all.

[Bminusrob]

With the possibility of Moorfield #1 off to university next year, we are looking into how to approach supporting the fees & accommodation costs, and interested in how other Lemons have done so?

I am looking at different scenarios, eg.
- paying fees upfront and accommodation costs from our savings
- use/take all the loans available, and match the future repayments when they become due from our savings

Any wisdom etc., appreciated.

You are asking what people did. In my case, I think my experience is somewhat out of date. I have twin boys who started university in 2007, and a daughter who started in 2010. In each case I gave them £1500 per term to help cover accommodation and living expenses. That was really all we could afford. They seem to have survived pretty well.

However, currently, "it all depends..." What course, which university. Reading the other comments, I think Moorfield has it pretty well covered. A graduate apprenticeship (like his son's ACA offer) is great. Oxbridge will beat this. I wouldn't spend too much of my hard earned money susidising university though. That's what student loans are for. If you have five figure sums to hand out, I think you may be better saving them as bank of mum and dad money to get on the housing ladder.

[didds]

I havent read the thread so others may have said the same.

You can of course pay the fees as you go along and not take out stsudent loans etc...

but bear in mind if #1 doesn't ever breach the threshold for payments, or doesnt manage that until much later in life then you'll have paid what may otherwise eventually get written off -

https://commonslibrary.parliament.uk/re ... s/sn01079/

The Government expected that around 20% of full-time undergraduates starting in 2021/22 would repay them in full. They forecast that after the 2022
reforms this would increase to 55% among new students from 2023/24

- see "Scale of student loans in England"

didds