Real life MMD: Should youngest get more?

wildthing01

i think i would arrange it so that each child came out with the same net result as far as possible - this would be fairest. you are paying for their education - it is not the youngest child's fault that that education will cost him/her more than his/her sibling's did. the standard of the education will (arguably!!!) be the same, they will have the same life-chances as a result of it, so it wouldn't be fair to leave the younger one with more debt, just 'cause the Government has changed the fee structure in the interim.

it would be different if you were spending more on the younger one to get him/her a bigger, better car/house etc than the older one, but with education, you are having to pay more to buy him/her the same thing.

taxsaver

Another possible option to consider (if your income allows, or by retaining the capital that you are considering gifting and drawing upon it as needed) would be to pay each month (or whatever period you decide) to your children the amount that they have had deducted from their salaries by way of student loan repayments.

This way you are not repaying the loans ahead of time which, as others have mentioned, would be foolhardy and you are seen by both children as treating them equally as the repayment terms are the same for each of them. You may well end up supporting the younger one for longer, but I cannot imagine that the older child would resent that in the circumstances.

It is to be hoped that at some point government policy will change and alleviate (write-off) some or all of this debt long before the 25 year or 35 year automatic write-off time is reached.

Marco12452

If you are going to be that generous. The total debt is 36K (9 + 27), split it proportionally, 25% / 75%. This will be 4.5K to the eldest and 13.5K to the youngest. However the eldest will have had some debt already, so best to factor that in too, unless you have already been contibuting to that.
With the above split, the eldest will get the benefit immediately and the younger will have it at todays level plus any capital gain from investment, so fair all round.

noodle

if i was in that position as a parent, i wouldn't think of it in terms of giving a sum of money to either child.. i would think of it in terms of giving that child a university education, by paying their tuition fees (or a portion thereof). through that thinking, i'd prioritise the younger child to try and ensure that both of them either paid nothing, or paid the same amount.

having said that, if i was a parent in that position i'd be mindful of my own experiences at university of the striking contrast, at least amongst the people i knew, between those who were supporting themselves independently, and those who we're getting significant parental support.

university is about more than lectures and parties.. it's about learning to be an independent adult, and the resourcefulness, maturity and self-sufficiency that this involves. whilst the temptation as a parent might be to help out, this can serve to stunt that development - it did for a lot of my friends, and many of them were in their 30s before they really grew up.

if you have spare money that you insist on spending on the children, then put it to one side, keep quiet about it, and hand it over when it's really needed... such as when time comes to buy a house. as others have pointed out, there's no real value in covering the cost of tuition fees at this stage anyway.

Paulieb_2

Having got a £10k student loan from 10 years ago I would say the best thing to do is to give them cash (with the main suggestion to use it to buy a house) and not fritter it away.

As stated by other posters there is no need to pay off a student loan due to the low rates, only paying it off depending on salary.
I've been paying my loan off for years at the rate of approx £20 per month and now I claim childcare vouchers which are taken out of my salary (pre tax), which along with my pre tax share option, I'm now no longer paying anything!

This doesn't bother me as I don't see it as proper debt (though obviously I know it is). What is more important to me is affording my own house for my family!!

foxy4114

If I were in the lucky position of having £18k to assist with uni fees, I would be inclined to try to proportion the amounts out so they would both get differing amounts (say 33% of the debt) but would be left with the same percentage of debt to repay themselve. I would explain that is what I propose to do and rather than feel badly done by, would hope they were grateful for the assistance and be pleased they were getting anything at all.

JayD

I would suggest you give slightly more to the youngest because the goal posts have moved considerably now. But I wouldn't give either too much as they do need some incentive to get out there, start earning a good salary with their education and pay back the loans as quickly as possible.

For what it is worth, I think the hike in student fees is utterly appalling.

laurahughes

I would say if you have 18k to spare open a high interest savings account for each of them and put 9k in there. fairs fair, you have 18k and you have split it equally between you children to do with what they want. The interest accrued on your savings will be more than the interest charged on their loan in the same period of time if you bank carefully.

They can then decide whether they want to use the money to pay off their students debts or not. Realistically a student debt is a completely manageable one. I am in 13k of debt and get £30 a month taken out of my pay cheque, I never had it so I never miss it.

System

My brother went to Uni when it was free & they were doling out grants, so he left Uni with a very small student debt. I went in the first year they introduced tuition fees and I didn't get a grant either, so I left with more than £10k of debt. I also worked throughout the Uni holidays whilst my brother did not. My parents paid for accommodation and food for both of us throughout our time at Uni, but they did not offer to help me with tuition fees. I accepted that it was my debt, as it was my choice to go to Uni, and I have never been bitter (or even thought about it before today) about my brother basically getting a much easier (financially speaking) ride through Uni. Your children will be adults by the time they go to Uni and if you're brought them up as well as you say then there's no reason why there should be any bitterness no matter what you decide.

I also completely agree with another poster who said that there's no benefit to paying off student loans early. The threshold will be quite high before repayments kick in so it may be that your children are never expected to repay any of it, and even if they do then it will only be proportionate to their income and certainly won't cripple them.

I would keep hold of the money until such time as it is really needed (deposits for a house, wedding, having a child etc) and then explain to all of your children how much you're giving out, to whom, and why.

lazer

Another issue to remember is that the eldest child is actually paying more a month than the youngest so will have less disposable income for saving for a deposit etc.

The old loans are paid at 10% of earnings over £15k , and the new larger loans, at 9% of earning over £20k (I think)

Therefore I favour the suggestion above of paying the monthly payments if you really feel the need to pay their loans.
However, i feel, like others, that the loan is your childrens reponsibility and you shoul give them both the same amount of money