Paying daughters uni living costs

Kerry_o'keefe

Not sure this is the correct board - so apologies if in wrong area. My daughter is planning to go to uni in 2009. If she gets student loans( I know one goes direct to uni to pay fees) could she put other loan in cash isa and then we could pay other bills for her?
What are tax implications for us? Are we allowed to put £x in her account every month to allow her to pay bills without any tax penalties?
Anyone who already does this would appreciate any experiences and advice.
Many thanks

Kerry

silvercar

You can do this. No tax implications of giving money to your daughter. She will get her loan in 3 instalments at the start of each term. Non-means tested element is about £1,200 a term.

oystercatcher

I'm not a financial expert but this sounds similar to what I am planning to do for my son who goes to Uni in Sept 2009 (all being well!)

From what I have gleaned from this site and elsewhere, the student loan is the lowest rated loan you'll ever get.
My son is pretty well controlled with money so I am going to advise him to borrow as much loan as he can and I will pay what I can to help him live. I'm hoping his Dad will also support him (divorced but supportive) . I'm not sure we can afford to pay all his expenses so he may need to dip into the loan but we are hoping that at the end of uni, a five year course he will have enough saved to have a deposit for a house when he starts working.

This plan wouldn't work for all teenagers though. I'm pretty sure some of my son's friends would see this as a huge supply of beer money . A friend of mine doesn't give his son any financial support and says "well that way I can't disapprove of what he spends his money on. " The son works in McDonalds which he enjoys and seems to be managing very well financially.

Oystercatcher

RedBern

as far as I'm aware there are no tax penalties for this - and unfortunately no tax rewards either.

Our 3rd child is into his 3rd year at uni - and we pay his fees, rent and living costs. It is on the strict understanding that he doesn't have an overdraft or loan though and so far he's stuck to that (as did his two siblings before him). He works part time in a bar to supplement his spending money. It is tough (for him and us) but so far.... so good.

Alikay

Yes, you can take the loan and put in in a high interest account or ISA. If your DD gets an interest-free overdraft with her student bank account, she can withdraw up to her overdraft limit and put that in a high interest account too, just as long as she remembers to pay it back again before charges become payable (usually at the end of the course)

Kerry_o'keefe

silvercar,oystercatcher,Redbarn and Alikay I have hit your thanks button but also wanted to thank you all in a post - so many thanks. I was unsure about the tax implications but all being well, will probably encourage daughter to save the loan. thanks again

Eccle_2

My parents did this for me 10 years ago when I went for university - paid fees and accommodation for me, and I took out the loan and put it into savings, then worked during holidays to boost my spending money. It was a huge benefit for me, as it meant when I came to buy a house I had a healthy deposit saved.

No issues with tax for them that I was aware of.

RedBern

I know from Martin's point of view the student loan is the cheapest borrowing you can have etc.etc. but it is difficult when your children are at Uni - my daughter (as I've already said) was being given her money from us and she rang home about 3 weeks into her course. Everyone was out for the day shopping in York as "the loans had come through" - she'd gone into town and bought herself a belt for £6 to feel part of it - but told me one girl had bought a dress in River Island for £80. When I reminded her that her friend would still be paying for the dress 5 years down the line when it no longer fitted her or was in fashion, my daughter said, 'yes but mum, it's lovely!'... It was so hard for her but she did get through - and how nice to have all her wages to spend when she started work...

onlyroz

I still had my student loan left when I finished university. I spent half of it on my wedding and the other half on a new kitchen for my flat. I'm currently £13K in debt, paying it off at about £150 a month. Yes, it's a cheap loan, but you have to be disciplined to make sure it's not spent. Perhaps it could be put in a place that's hard to get at? E.g. an ISA with, say, 3 months notice on withdrawls?