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

Ed-1

Ziggy_Stardust wrote: »

Can I ask a question on behalf of my daughter?

She has two loans one from her BSc which she started in 2010 and one from her PGCE which she started in 2013.

Here are the amount and interest rates

Plan 1 £17,607.08 1.50%
Plan 2 £12,380.10 5.50%

She has a lump sum of about £10k so is it worth paying off plan 2 or even is it possible to pay that off first? Given that interest rates in the banks at the moment are so poor it doesn't seem logical to sit on this money while her loans are gaining interest. I'm guessing she will have these loans paid off before the 25/30 year expiry dates.

Where did she do her PGCE and what were the tuition fees out of interest?

Ziggy_Stardust

Ed-1 wrote: »

Where did she do her PGCE and what were the tuition fees out of interest?

Thanks so much for your help, I've had to reread your advice a few times but I think I've got it . She did her PGCE in Liverpool and her tuition fees were £9K! :eek: At the moment she is just doing supply as she (any many like her) didn't manage to secure a job in September, so its not likely anything will be paid this tax year. Teachers' starting salary is pretty low too, about £22K I think.

abster31

I know it's been quite a few months but I just wanted to update a few people. I posted because I had gone to college for two years and was due to go to university. At that point I had just enough money to pay the fees. The government then tripled the fees. Martins money calculator showed I would pay back two times that amount.

I have six weeks of uni left. I worked my !!! off and just took the course fee loan (27k) in total. I am as I suspected starting a job at £27k. I am sorry I took a decent degree with proper job prospects. I could not be a building surveyor without the degree.

I have had my children. I do not expect to take any career breaks. I will retire in 30 years. I will repay twice what I borrowed.

So, my fears were real. Now the government has enforced affordability calculators to a mortgage application, my affordability goes down.

A very unfair system. I feel I am paying for the English degree students going to uni for an experience who end up earning little.

silvercar

I am sorry I took a decent degree with proper job prospects. I could not be a building surveyor without the degree.

What was the other option? A low paid job, in less interesting work, on a lower wage?

You should be comparing what you will earn, less your loan repayments against what you would have earned had you not taken a degree.

Plus the satisfaction you will get by having a career in the field you want to work in.

abster31

I am not moaning. I am pointing out the system is flawed. How can it be reasonable to pay back double you borrowed? I am not the only person who has pointed out this. Read all 27 pages and you will see that many posters have stated how flawed th system is.

silvercar

But will you earn more with your degree than if you didn't have it?

abster31

Yes I will. The point I am trying to make is it is not a fair system. It is supposed to be not for profit, so how is making 100% not for profit? As other posters have said on here, it is an expensive loan which is higher than other loans. All I am trying to say is it's not as black and white as the articles on this website. If you aren't taking a career break and are earning decent money you pay back double. I wanted to better myself for my children and myself plus pay more tax. It would be fair to have a cap. The graduates who will earn more are propping up the graduates that don't. Yes it was my choice to better myself, yes the fees are higher, but no that does not mean you should be paying back double. It is my hard work that got me here, why should I not have an opinion?

silvercar

I am not disagreeing with you. In fact I think the interest rates now charged are extortionate. My younger child started uni nearly 3 years ago and he has higher fees and higher interest rates than my older son. So double whammy. Plus he may do a masters degree in September so not gain from the help with that that is starting a year later.

Remember some graduates won't pay anything back, ever. Others will be hit with the high rates. I guess the answer is to pay off as much as you can as quick as you can, if you feel you will end up paying it all back. If you will never pay it all back then there is not much point overpaying.

clamber

Really helpful article and the loan calculator is very useful. Not sure if it would be better to save money for our 18 year old daughter to use for a mortgage in future or reduce student loans. She is planning on a career involving 3-4 years of postgraduate studies after first degree so won't start earning above the threshold for repayment for several years. Not sure how to calculate the effect of this in deciding how best to help her. Also would be great if the loan calculator could take account of possible part time working in future. Thanks

knitter39

What about the £10k which could accrue on some loans during the student years. This cost seems to be ignored in the article but would be relevant for those with lump sums trying to decide what to do....