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

setmefree2

From the guide

Simply put the money aside until you've more info

http://www.moneysavingexpert.com/students/should-i-get-student-loan


Inheritance Tax
You can also make exempt maintenance payments to:

• your children, including adopted children and step-children, who are under 18 or in full-time education

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm



However, if you try to pay off student loans or give them a house deposit after graduation I think that the £3k limit may apply????

Annual exemption - You can give away gifts worth up to £3,000 in total in each tax year and these gifts will be exempt from Inheritance Tax when you die.

Just a thought.

kayr_2

setmefree2 wrote: »

From the guide
http://www.moneysavingexpert.com/students/should-i-get-student-loan


Inheritance Tax
You can also make exempt maintenance payments to:

• your children, including adopted children and step-children, who are under 18 or in full-time education

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm



However, if you try to pay off student loans or give them a house deposit after graduation I think that the £3k limit may apply????



Just a thought.

Interesting. Hadn't thought of that one. However I suppose you'd reasonably hope not to die within 7 years of paying off the student loan for a child/helping them with a house deposit.

setmefree2

kayr wrote: »

Interesting. Hadn't thought of that one. However I suppose you'd reasonably hope not to die within 7 years of paying off the student loan for a child/helping them with a house deposit.

Depends how old you are . Giving them the money for Uni ensures you're fully covered from IHT. (There is no set limit for maintenance money, but it must be considered a reasonable sum to cover things like food, bills and spending money. If it is excessive, HMRC may deem that there is a ‘gift’ element to the maintenance payments.) Giving them a deposit for a house or buying them a car means they "might" be liable to IHT if the worst happens. Plus you can still gift an exempt £3k pa and an extra £5k if they get married to "help" them save for a deposit.

Just a thought.

nbldmum

Another newspaper report ...from the Sunday times Jan 15:

According to Skandia they reckon that the tax payer will face an annual bill of £8.7 billion from unpaid student debts that will need to be written off in 30 yrs time ( estimate the government, whoever they may be, will need to write off £30,649 - £64,935 per year for each 2014 full time graduate).

.....they say that this is more than £2 billion above what the government is spending on universities this year

ie they say that only those making above £60,000 will make enough to pay back the loans in full

That said the report is still positive about the value of university.

Lokolo

nbldmum wrote: »

Another newspaper report ...from the Sunday times Jan 15:

According to Skandia they reckon that the tax payer will face an annual bill of £8.7 billion from unpaid student debts that will need to be written off in 30 yrs time ( estimate the government, whoever they may be, will need to write off £30,649 - £64,935 per year for each 2014 full time graduate).

.....they say that this is more than £2 billion above what the government is spending on universities this year

ie they say that only those making above £60,000 will make enough to pay back the loans in full

That said the report is still positive about the value of university.

In 30 years time you'll need that £8.7 billion just to buy a Mar Bars.

Don_Draper

In the next week or so my child's school wants its pupils to apply for the tuition fees loan to start university in October 2012.
Does anyone know when the government will decide about the early redemption penalty issue?
Also, am I correct in thinking that applying for the fees loan does not commit my child to taking the loan in October, if we decide to pay the fees ourselves when we know about the penalty?
By the way, my thanks to all the helpful and knowledgeable contributors to this thread.

kayr_2

Don_Draper wrote: »

In the next week or so my child's school wants its pupils to apply for the tuition fees loan to start university in October 2012.
Does anyone know when the government will decide about the early redemption penalty issue?
Also, am I correct in thinking that applying for the fees loan does not commit my child to taking the loan in October, if we decide to pay the fees ourselves when we know about the penalty?

I gather there are a few glitches with the SLC website at this early stage so I wouldn't rush into it. If, as I guess from your comments about paying fees upfront, your child will not be eligible for grants etc because household income is above threshold the process is very fast (my son got processed in about 3 days last May). It only seems to take a long time if you are submitting financial evidence and the situation is not straightforward. So I don't think there is anything to be gained by applying early - it might just create hassle if the application process isn't working smoothly yet.
Early redemption fees: no news yet.
As things stand you don't have to take the fees loan even if you apply for it. My son's tuition fees get paid on Feb 1 so in theory he could still decline the loan by resetting the amount to zero now. He won't be doing that though!

Taiko

Going to chase for some information on early repayments this evening.

kayr_2

Taiko wrote: »

Going to chase for some information on early repayments this evening.

Good luck! I am still waiting for a reply to my enquiries but you will have better connections...

I think it is so wrong to for the government to expect young people to apply for (their first ever?) loan without knowing exactly what the conditions are.

kayr_2

Well I have had a reply to my email to the Dept of BIS about early repayment penalties. Not exactly informative and doesn't address the questions I asked but no surprises there. Will reply to her and try to get a proper answer.

Dear ...

Thank you for your email of 20 January, about the early repayment of student loans. On this occasion I have been asked to reply.

Ministers recognise that some people may want to pay off their student loans early and they will be able to do so, just as they have been able to in the past.

As you are aware, as part of the Higher Education White Paper (‘Students at the heart of the system’), the Department consulted on whether there should be an early repayment mechanism and, if so, what that mechanism should be. A number of different options were presented as part of the consultation, which closed on 20th September 2011.

The Government is now considering all the comments received and will respond in due course.

I hope this information has been helpful.

Yours sincerely

Anne Robertson
BIS MINISTERIAL CORRESPONDENCE UNIT