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

setmefree2

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

What a pile of crap!

Taiko

Announcement on early repayments should be before the end of February, giving plenty of application time for the loans, and opportuntity to withdraw applications if students so choose.

setmefree2

Student loan early repayment penalty proposal 'abandoned'

Plans to impose penalties on students in England who pay off university loans early are to be abandoned, ministers are expected to announce.

http://www.bbc.co.uk/news/education-17053581

Taiko

Told you would happen!

susansim

MrsAverage wrote: »

Having researched this
Surely there should be a system where people are motivated to get higher education and work harder for more money - whereas under this cockeyed scheme it would 'save' money if you over borrow, underacheive and under work.
Offering bigger loans to those from poorer families is all spin and smoke and mirrors as the repayments are the same irrespective of loan borrowed. Someone from a poorer background will repay the same as a rich kid if they end up doing same job.
IMO the result will be more and more of the unneccessary lower value degrees and Unis as more and more people realise it's a free ride or low cost ride.

thanks MSE for a clearer guide as to paying upfront - makes for interesting and alarming reading. My son doesn't have clue what he'd like to do after Uni - but on this advice the short answer is do nothing and be educated on govt money and then live on benefits. win win

Well said. We go to university to maximise our potential to think; to push the boundaries of learning; to achieve a qualification that might give us a chance of a decent job with some potential for earning a decent salary.

Most of the arguments for not paying upfront assume graduates are going to earn a middling salary or are going to be unemployed. Not exactly a motivator.

The calcuations for not paying up front remove interest as a factor, but remember the effects of compound interest!! Everyone bangs on about the benefit of this for savers but it works in the reverse for borrowers.

For years, interest rates have been ahead of RPI but now, there is a substantial difference between the two. If you have the money, you forego a low level of taxable interest but your undergrad doesn't accumulate interest of RPI + 3% (around 8%). If you don't have the money it may still be cheaper to borrow. And you can always ask the student to pay you back when he starts earning!

The 'unnecessary lower value' degrees may indeed become more popular - 'a cheap ride' so long as you're not too successful. What does that do to our economy? Where is the investment in that?

susansim

setmefree2 wrote: »

From the guide



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

Just a thought.

They can make much more use of your money now than if they have to wait until you are dead and you know it's being put towards their education (and a few beers no doubt)

A truly great gift

susansim

nbldmum wrote: »

melancholly wrote: »

the unbelievably fast schedule to bring it in is a major part of the problem. giving more notice could have given time for unis to assess charges and to restructure where needed. /QUOTE]

The sudden tripling of fees I think has also caused the huge problems for parents. Parents may well have planned for costs of current lower fees, but don't necessarily have the capacity to suddenly find the cash for such overnight hikes. I know the argument that you don't have to pay upfront etc etc but the level of repayments and debt accrued under this new system is just..... wrong.

If there had been notice given of such impending hikes, say in a minimum of 5 years, I guess many more parents and potential students could try to put something aside and plan. This way, we haven't had the opportunity to plan.

Absolutely right. And not just parents but students themselves. in the States kids, parents and grandparents start saving for their 'college fund' from an early age. We are left with no option but to find an immediate solution, be it a student loan, personal loan or to go knocking on the door of grandparents

susansim

tyllwyd wrote: »

My understanding is that reviewing the threshold annually (from 2016) is something that they committed to doing when they were setting up the new system, and that they also said they would be reviewing the thresholds on the current loans. But it isn't a guarantee to raise the threshold, and obviously keeping it the same for a period of time would be an easy way to raise more money over the life of the loan. But that's part of the picture if you take out a loan, not much that can be done about it - in the same way, we trust the government to raise the thresholds for income tax and national insurance every year, but they are happy to fiddle with them when it suits them.

So a 30 year loan with no clear terms and and conditions - the rules can be changed at the government's whim. Why would you sell your soul like that?

jago25_98

do i have to study in the uk to use the loan system?

Why is mse spinning on this

worried62

Here is my problem.

I have £10,000 saved in a NatWest Cash ISA saved for my son's University Fees.

I also have a mortgage of £7,500 on a variable rate which I pay 2.5% on, and can draw down further funds at this rate from earlier overpayments.

1. My son has a sister who is 15 years older. When she went to Univeristy there were no tuition fees and she got a full grant. How can it be fair that one sibling gets their education free while the other has to pay a fortune?

2. If fees had remained at £3,250 per year I could have afforded to pay them and would have done. Should I not still pay a similar amount? If I do would it make sense to pay the first year's fees as these will have the most interest?

3. Would it be cheaper if I put my son's fees on the mortgage where the interest rate is only 2.5%, compared to 3% plus inflation which would currently equate to about 8%?

4. If I paid no fees, could I pay the annual interest on the loan to stop it growing - is this possible?

5. My son has applied for a four year course which makes the figures even more horrific. If I retire half way through his course such that our household income drops from £55,000 to £21,000 are the fees reduced?

5. I am thinking of paying the first two years fees only. Is this stupid?

1. and 2. I think are the biggest moral dilemmas.