'Don't pay your kids tuition fees upfront' Discussion Area

Je55ica21 wrote: »

Does anyone know how repayments are calculated for the self employed please? Just assuming that they would look at pre-tax profits and work it out on 9% of anything above threshold at the end of the financial year?

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http://media.slc.co.uk/sfe/1718/ft/sfe_terms_and_conditions_guide_1718_d.pdf

SarahB89 wrote: »

I'm part way through a postgrad MSc, using a Plan 2 government loan of £10k, of which I've received £5k so far. However, given the interest rate rise on Plan 2 loans, does it now make more financial sense for me to put my second year fees on a credit card than take out the rest of the loan? I have an existing Plan 1 loan from my undergrad which is being repaid at about £200/month, and I expect to pay it off within 30 years. I'm aware that the advice is usually to just take the loan, but I'm no longer sure that it's the lowest rate, and given that it's only £5k, is there a better way of doing it?

Postgraduate loans are not Plan 2 loans. Plan 2 has an interest rate between RPI and RPI+3% depending on earnings between £21,000 and £41,000. Postgraduate loans have a flat rate of RPI+3% regardless of earnings.

Plan 1 loans taken out from 1st September 2006 are written off after 25 years, not 30 years.

Take the loan. At worst it will increase your graduate contribution. At best it will save you a lot of money on commercial credit which MUST be repaid regardless of what you earn.

My DD has just completed her postgraduate degree and is signed up for an MA starting this year. Now, from previous dealings with SFE I am reluctant to take out another loan no matter what the assurances were given about thresholds and repayment write-offs. I have found them totally incompetent and have had many sleepless nights while sorting out their failings by myself. I did get a verbal apology but they do seem to be a law unto themselves.

The thing is I have a large inheritance and could easily pay the 9k fees. Very fortunate position to be in I know. But is this really a good idea, paying up front or simply adding to the existing 40 odd k with its 6% interest. The sums will be enormous!

Thanks in advance for any suggestions.

I wonder how this would work now, with savings interest so low.
My children started uni just as maintenance grants ended and loans began. I was a teacher (languages) and had no problem with supporting them (that may be !!! because, to my amazement, in the last 15-20 years I have seen teachers, inc Heads, protesting that they're in [non-mortgage] debt because their salaries are too small). As part of making them financially aware (I had opened PO a/cs for them at 13 and paid their pocket money in annually), I explained that they should take the loans and put them into the best savings vehicle, because the interest was higher than that on the loans and they would end up with a profit. They could understand the maths but not why they should be given that opportunity, which they assumed all students in their position would jump at. I didn't understand either.