Child off to uni, tax implications if they save parental contribution?

brick

[Also asked at https://forums.moneysavingexpert.com/discussion/5217261]

Hi.

Apologies if this has already been asked; if so, please point me towards the relevant thread(s).

My child starts university this autumn, and I would like to contribute towards the cost.

I understand that as a parent I can provide money for likes of uni fees and reasonable living costs without any tax implications.

What is the tax position if my child opted to save said money provided by me, and instead take out a student loan (for equivalent amount) to pay towards fees and living expenses?

Benefit to child would be that:-

a) Their savings could match or beat 1.5% loan rate (am in Northern Ireland, 1.5% at moment - not RPI + 3%).

b) On leaving uni, child would have potential flexibility to use savings as deposit on house... paying off lower cost student loan as opposed to seeking commercial mortgage for saved amount. Assuming that student loan rate undercuts commercial mortgage.

But, I would want everything to be above board tax wise.

Any advice?

Lokolo

There isn't any tax position. This is exactly what I did. Had a nice healthy house deposit when I left university.

Obviously I could have chosen to use the money for drugs s*x and rock n roll instead, but sadly I didn't.