Saving for university costs: How much?

grey_gym_sock

Reue wrote: »

I was talking in comparison to future rent payments while saving for a house deposit.

The main point is; Is it better to

1. give your child £20k for university, them leave with 0 debt but need to rent for 5 years to save up a £20k house deposit.

2. give your child nothing for uni. they take £20k in student loans. Leave uni with £20k of debt repayable at inflation + (low % depending on income) but then not need to rent for 5 years to save the house deposit as you give them £20k for that instead.

firstly, that's only the choice if you do have about £20k
but don't have as much as £40k available to help each child ...

but i'd probably go for option 1. i don't like the look of loading up maximum debt (SLC + mortgage) at the same time, when just starting full-time employment. and there's no need to buy immediately - often, buying doesn't suit ppl until they're a little older, anyway.

Idiophreak

Reue wrote: »

Notice I said might be better off. Not will be.

Clearly you are a good example of an exception, although you did work yourself in the holidays so not exactly a match for the type of student I was discussing who has never been employed themselves.

You said that by paying for everything they aren't going to get a real understanding of finances. You didn't say "they might not", you said "aren't", as a fact.

...but in any case, you also get plenty of people that "might" get no help from their parents and still come out of uni without the slightest financial common sense....so I just don't see a connection between helping your children enjoy their time at uni and them being financially savvy when they leave...

....and the post that you were responding to explicitly mentioned that the students in question would have to raise their own spending money (ie work) once their savings had run dry...Surely they were the kind of student you were discussing?

grey_gym_sock

Reue wrote: »

- If someone gets everything paid for them, they wont get a real understanding of finances. That part I am stating as a fact as it is what I believe to be a fact.

well, it's not a fact.

there - does that settle it?

seriously, if i had children, i would not be giving them an endless stream of money, regardless of what they did. but i would probably make "grants" available for specific purposes. so they might get a lot (or even all, if affordable) of the costs of going to university paid for, but that's only on condition they put a lot into it, too (just not financially), and is only because it's a worthwhile thing to do. that wouldn't prevent their understand finances. they'd know what the overall costs were, and would be managing their own spending.

Reue

grey_gym_sock wrote: »

well, it's not a fact.

there - does that settle it?

seriously, if i had children, i would not be giving them an endless stream of money, regardless of what they did. but i would probably make "grants" available for specific purposes. so they might get a lot (or even all, if affordable) of the costs of going to university paid for, but that's only on condition they put a lot into it, too (just not financially), and is only because it's a worthwhile thing to do. that wouldn't prevent their understand finances. they'd know what the overall costs were, and would be managing their own spending.

Sorry, I deleted my response as realised we had become way off-topic from what the OP was actually asking.

I do see what Idiophreak and yourself are saying about wanting to help your children and how you dont think it would affect their financial responsibilities.

My answer to the OP's initial question is that I would not make any payments for university and instead save that money to gift to them as a house deposit after they had entered full time employment.

Alex92_2

Obviously being 20 (near 21) I have a lot of friends who are finishing uni or going through it.

A few people have come out in £45K debt from 3-4 year degrees. These people did NO work (paid) and relied fully on loans and had no family help.

Some other people came out with £15-20k debt, these people had part-time jobs working at bars, clubs, sports clubs, royal marine reserves etc.

IMO, if you really want to help your girls, i'd say give them a few hundred a month and make them sort of everything else with loans. The loans are good (you dont have to pay back til youre on over £24K a year etc).

Doing this will teach them the value of money. Will hopefully inspire them to get a job (meet new people, make new connections, work experience, character building) and teach them to live on a budget and not over spend.

Help them out financially with bigger commitments down the road so they dont take it for granted. Marriage/Deposit on first house etc.

MrsCautious

I appreciate all the comments and points of view -- I well remember my own antipathy towards students whom I perceived to have no understanding of money/had it easy as I worked my !!!! off alongside getting a very average degree.

My perspective 20+ years on is different, I have no doubt my daughters already have an understanding and appreciation of the value of money and will appreciate my help, the thought of them starting out in a career in substantial debt is alarming and I want to help lessen the certainty/impact of that. And I don't want them to face the same pressures as me when it comes to juggling so much paid work and studying.

Buying a house can wait, who knows I may have enough in the bank/wisely invested/earned through continuing to work my !!!! off/saved through being so very tight as I'm being with money now and possibly into the future to help when the time comes, or I may not, but I see this as something they will be in more of a position to stand on their own feet for when the time is right.

andy.m_2

Does student loan not impact on credit availability?
i.e. If you help out with a £25k gift for a house deposit, but they have £25k of uni debt then surely they are in the exact same position financially? A net balance of £0.

They are unable to sensibly raise a mainstream mortgage due to prior financial liabilities.

Maybe a structured gift something along the lines of, "I'll give you £12.5k over your course, you work part time and holidays and if you come out of uni debt free then I'll gift you another £12.5k towards your own gaff"?

Subsidised learning, a sense of ownership and a foot up the housing ladder as a reward.

Idiophreak

andy.m wrote: »

Does student loan not impact on credit availability?
i.e. If you help out with a £25k gift for a house deposit, but they have £25k of uni debt then surely they are in the exact same position financially? A net balance of £0.

They are unable to sensibly raise a mainstream mortgage due to prior financial liabilities.

In a word, no.

Student loans will be considered for affordability calculations, but they're not factored in in the same way a regular unsecured loan would be.

When my wife and I got our mortgage, we had 30k of student loan outstanding between us and we'd not have got the mortgage if they'd simply deducted it as you suggest.

Alex92_2

MrsCautious wrote: »

Buying a house can wait, who knows I may have enough in the bank/wisely invested/earned through continuing to work my !!!! off/saved through being so very tight as I'm being with money now and possibly into the future to help when the time comes, or I may not, but I see this as something they will be in more of a position to stand on their own feet for when the time is right.

Are you interested in adopting a 20 year old boy? :P

Jegersmart

Another example of a lot of people not being able to stop relating the issue at hand (how much?) back to themselves or their own situation. I genuinely wonder why it is so difficult for a lot of people to be even remotely objective?

J