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

kayr_2

setmefree2 wrote: »

Why do you always focus on the students who aren't going to earn much?


Plenty of students earn a great deal.

I guess there are many more students who would fit into scenarios 1 and 2 than 3 but I think this is a very valid point. If a student is doing a course equipping them for a worthwhile but poorly paid career eg youth work or perhaps working for a charity, then taking all the loans is the obvious thing to do as they are not likely to repay them. But if your child is going to a top university and set on a career in finance/law/medicine etc then I think it would be wise to consider they might be better off not taking the loans and paying up front as Martin suggested in scenario 3. Especially if significant penalties for early repayment are announced. This is assuming the whole system doesn't collapse/get changed by a subsequent government.
I was startled at a recent reunion (admittedly at a "competitive" university) where it was apparent that many of my peers were earning extremely large salaries (sadly not me!). If son#2 does the course I think he may, he could potentially earn bucket loads of money. Or, given his personality, I could envisage him working for a good cause for very little money. So the decision is not at all clear. Doing the sums and gazing into our crystal ball will keep us occupied for some time.

kayr_2

melancholly wrote: »

'rich' parents do it because they choose to, not because they have to. the quote suggested that the child saved money because otherwise her parents would have had to pay the fees. that would never have had to happen as the student does the borrowing from the SLC.

i'm not denying that parents paying upfront to help out kids is an option and a very generous one at that, but that is not what was being suggested in that quote from the article, which i still think misses the point of student finance.

Yes "rich" parents choose to pay the fees; they obviously don't have to. I imagine they do this because they think it makes better sense financially??

Not sure about that quote anyway - it was the journalist who said, "so her parents don't have to..."? In my experience journalists aren't always particularly accurate. Was that a real journalist or does the quote just make an eye catching opening to an article?

I'm assuming you think the quote misses the point rather than the article?! I don't always agree with Martin but I think that article had some very good points in it.

melancholly

kayr wrote: »

I'm assuming you think the quote misses the point rather than the article?! I don't always agree with Martin but I think that article had some very good points in it.

yes - the quote was used in the article to suggest that people didn't get student loans and then it was suggested in this thread that that wasn't the case. i think the quote suggests (and i agree about journalists not being as specific as they could be btw!) a mis understanding - i couldn't understand the attack on that point.

fwiw, most friends of mine at uni who were from 'wealthy' backgrounds took out the full loan. admittedly this was in a time when a good savings account meant they could make money from it. looking to the long term, even with the current financial situation, it is likely that people can still make profit from it - although the tiered interest rates do make that more difficult. i'm sure the exceptionally wealthy did just pay up, but sadly i never moved in those circles!

kayr_2

melancholly wrote: »

fwiw, most friends of mine at uni who were from 'wealthy' backgrounds took out the full loan. admittedly this was in a time when a good savings account meant they could make money from it. looking to the long term, even with the current financial situation, it is likely that people can still make profit from it - although the tiered interest rates do make that more difficult. i'm sure the exceptionally wealthy did just pay up, but sadly i never moved in those circles!

With the "old" system I can't see why it would be financially worthwhile not to take the loan; with the new system it's possible opting out of the loan system could be better. With low savings interest and RPI + 3% (while they are students) on the loan students from 2012 have a much less attractive deal. Can't see a profit to be made; however the prospect of not ever having to pay it back is a significant factor.

melancholly

kayr wrote: »

With the "old" system I can't see why it would be financially worthwhile not to take the loan; with the new system it's possible opting out of the loan system could be better. With low savings interest and RPI + 3% (while they are students) on the loan students from 2012 have a much less attractive deal. Can't see a profit to be made; however the prospect of not ever having to pay it back is a significant factor.

right now, you're right, but long term, interest rates will go up and it will be a different equation - not as good as the previous system, but not impossible.... student loans always need to be considered over the full term, rather than just over a couple of years. i do think the RPI+3% while studying is particularly cynical though. for higher tax payers, having the money in a tax free ISA (with the increased levels) can also nudge things a bit.

tyllwyd

I've been trying to look at the pros and cons of paying up front, but if you want to go down that route I can't seem to find any information on whether you need to pay the whole 3 years fees up front, or can you pay one year at a time?

Lokolo

tyllwyd wrote: »

I've been trying to look at the pros and cons of paying up front, but if you want to go down that route I can't seem to find any information on whether you need to pay the whole 3 years fees up front, or can you pay one year at a time?

All universities charge per year.

Lokolo

setmefree2 wrote: »

I don't think I'm missing the point at all! From the BBC article

Ask yourself this why do the very rich pay upfront?

It doesnt have to make financial sense just because people do it, plenty of people have swimming pools in the uk - they arent worth it.

One of my close friends had his finance paid for by parents and they arent financially educated, they just have more money than sense :-)

2sides2everystory

Lokolo wrote: »

All universities charge per year.

Not strictly true I think. One university (forget which one) made a headline a couple of weeks ago for stating that they did not believe it was fair to charge a four year course at 4 x £9,000 = £36,000 so they capped it at £27,000. Not sure how they spread that out ...

Lokolo

2sides2everystory wrote: »

Not strictly true I think. One university (forget which one) made a headline a couple of weeks ago for stating that they did not believe it was fair to charge a four year course at 4 x £9,000 = £36,000 so they capped it at £27,000. Not sure how they spread that out ...

I wouldnt be surprised if it went yearly only because otherwise it would cause problems wit situations such as changing course, repeat years dropouts. Would be a disaster to pay 27k only to drop out after a year ha.