Real life MMD: Should youngest get more?

oldtractor

Yes the youngest should get more.

harryhound

Interesting little factoid today: American parents owe more on university loans than on their credit cards.

I think this country is going the same way.

In the old days parents used to pay for their children to have an apprenticeship, so perhaps we are just going back to the norm.
Mind you the other side of the coin was that the children were expected to look after their geriatric parents in due course.

Impet_Limpet

Don't use it to pay off the student loans (which if they end up so high and they don't earn enough will eventually be written off anyway).

The money should be split equally and used for a deposit on a house or similar, once they finish university and start off in life. They can get a smaller mortgage or use it to start off a business (the interest charged on a mortgage would likely exceed the interest on the student loan).

harryhound

I notice that one of the dot.com entrepreneurs has advised young people in USA to drop out of dodgy college courses to avoid a life of
debt servitude.
Seems that over in USA you can walk away from a mortgage but not from educational loans!
Time to emigrate?

http://abcnews.go.com/Technology/facebook-paypals-peter-thiel-pays-college-students-drop/story?id=13693632

http://www.prnewswire.com/news-releases/buyer-beware-prominent-bankruptcy-attorney-of-myeasy7com-warns-parents-about-student-loans-122880959.html

System

Really, I've always looked as my student loan as more of a graduate tax than a loan to be paid back as soon as possible - the government pays my fees upfront, no questions asked. I then pay back a percentage of my income (directly, at the same time as all my other taxes) each month. I think you should ask yourself whether you would be happy to pay their graduate taxes or not, had the government chosen to take the route - if not, I don't think you should pay off any part of either loan.

I haven't read all the other posts, so this may have already been mentioned, but I would say read Martin's page on whether or not to pay back student loans (the normal mse address then add /loans/student-loans-repay). He explains quite nicely why there's no point in doing so - it's normally much better to put the money into a high-savings interest account than to use it to pay off the student loan.

I'd say to forget about the student loans entirely, and just split the money equally between the two of them, making it a gift. They can then decide what they want to do with the money, rather than having to use it to pay off a loan that doesn't really cost them anything over the years. This seems fairer, and may even end up in both of them making money.

Mike66w

tom1985 wrote: »

To the OP, if you are set on covering your children's tuition fees then yes, I believe you should give £27,000 to the younger child and £9,000 to the oldest. This doesn't represent any profit or advantage to the youngest child, it merely leaves them in the same position as their older sibling. Any unfairness is the fault of the governments.

To the other posters saying children should pay for their own debts, whilst I would generally agree with this sentiment I wholeheartedly disagree where education is concerned. A majority of members of this site would have grown up when university education was free. Now kids are expected to pay £27,000 tuition fees, have less chance of finding a job, pay higher taxes and work more years until retirement. Have some compassion.

The majority of members of this site would have gone to university when it was seen as an education path for the academic elite (top 10%). Now it is seen as the 'norm' as there are precious few other options (lack of apprenticeships for a start) with up to 50% of college leavers going to uni.

The cost to provide this level of education has therefore risen dramatically to cope with the additional load on the system. It is, in my view, unreasonable to expect the tax payers to fund this (optional) level of education and the costs are rightly being passed on to the main beneficiary i.e. the student.

With respect to repaying the student loan, the amount paid back is entirely dependant upon the salary achieved by the individual i.e. a graduate tax in all but name, and any outstanding loan is wiped after 30 years.

Use the money in other ways to help them out (equally)...

harryhound

Yes in the old days those who missed out in the University stakes had to pull themselves up by their own bootstraps; at night school or by doing an Open University degree.