Pay tuition fees or give lump sum at end of course?

unisoon

My DS will hopefully be heading off to Uni next September so we're looking at finance for the first time.

We are an ordinary family but I always planned to pay his tuition fees, by me upping my hours at work and paying it mainly out of monthly salary with some savings.

My Mum however thinks this would be a mistake, as it will make no difference to DS's loan repayments, once they start, as he'll still be taking out a maintenance loan and its calculated on the graduates income, not what they borrowed.

She thinks that over the next few years it will become more obvious that this is a graduate tax scheme and me working hard to pay his fees will basically be me paying the taxman and DS won't benefit unless we can pay all his fees and expenses ( which we certainly couldn't!!). The alernative would be to pay the fees money into an account to give DS on graduation to pay off his fees or whatever.

Does anyone have any advice?

Lokolo

Your mum is correct in that it is based on the income of your DS, not the total amount owed. The threshold is currently £21k. If your DS earns £20k he could owe £10k or £50k, he will be repaying nothing.

However it will be different if he earns a lot, as this will reduce the total capital more quickly.

Financially, it would be pointless taking out a loan then paying it off at the end university, you may as well pay it off when billed. However if your DS is likely to drop out, and with you having paid money you will effectively have wasted a lot of money.

patanne

I too agree with your Mum. If you want to help him, I think you would be better saving whilst he is at uni & then helping him with his deposit for his first house, as the bigger the % deposit the better mortgage rate he will get. If he thinks all the debt is going to be his at the end it might make him less extravagant.

GwylimT

Take out the tuition fee loan, if you still want to make an equal contribution put it into a bank account, he could use it as a deposit on a home.