Did you retire early before kids went to Uni? How expensive was it?

SouthCoastBoy

Yes times have definitely changed. Student accommodation is nothing like I had in the 80s. We had no heating, holes in the ceiling and terrible shabby furniture, but it was only about £18 a week. Left uni with zero debt. I think it was the golden era. 

Anon

jamesmorgan said:

Croeso69 said:

What is the current threshold for parental income such that a child qualifies for the full loan?

Presumably tax credits and child benefit for other children are ignored?

Is there an allowance if you have other children still at school so the allowable income is higher?

My eldest is in year 11 so would be going to Uni in September 2023 if he wishes. Presumably the assessed tax year would be 2022/2023?

Still working but thinking about retiring early soon, age 57.

I can drain an ISA and spend some PCLS on top of taxable income if the income for a full loan is too low.

I think the current threshold is £25K taxable income.  Tax benefits and child benefit are not taxable so are ignored.  In fact, a good way to get below the threshold is to pay more into your pension - not only does this reduce your taxable income but also increases tax credits.

This link provides some further info that you may find useful..

https://www.savethestudent.org/student-finance/parents-guide-tips-university.html

Thank you for the interesting discussion in this thread, including the above idea of paying more into a pension to reduce income/increase the loan available (and obviously increase your pension, with potentially tax relief on the contribution too). 

Does anyone know, do the thresholds in that article (https://www.savethestudent.org/student-finance/parents-guide-tips-university.html#finance "Maintenance Loan amounts based on household income" section) work as thresholds (so £29,999 income would still get the same maintenance loan/require the same parental contribution as £25,000), or is it all pro-rata?  I ask as based on the suggestion above about paying into a pension, each £5k band is around £659 difference, so if you were in a position to pay more into your pension you would want to consider the exact contribution - £1 extra to drop below a threshold could open up a further £659 loan (and therefore in theory £659 less for you to find as a parent, but only if they are thresholds).

The allowance for additional children is £1,130 per child (i.e. your income household income is reduced by this amount).  MSE Martin wrote an article about this a while ago in the FT (https://www.ft.com/content/78e9e1da-ce10-11e7-947e-f1ea5435bcc7).  If you have more than one child at university as some people have commented above, the SLC assumes your income available to contribute is the same for each child (so as an example, if the calculator said you should contribute £4k for the maintenance for the first child at uni, they don't remove that from your household income despite £4k already being committed/spent, and only take £1130 off your income!).

MallyGirl

It is not bands - it is a gradual scale of contribution vs income 

zagfles

Croeso69 said:

jamesmorgan said:

I retired early 50's before my 4 children went to uni.  As I was living off savings (low official income) they all were eligible for maximum student loan for maintenance.  This is around £9K and all my children found it enough to live on at uni (none went to London or SE Uni's though).  My view is that, as the majority of students never pay off the loan fully, it is more sensible to take out the maximum loan than contibuting to living costs and taking out a smaller loan.  If you wanted to avoid them having student loan repayments it is still typically better for them to take out the loan and for you to make the loan repayments as and when they fall due rather than pay up front.  The best way to think of it is simply a graduate tax, which now we are out of the EU may be what it ends up being.  My only costs incured whilst they werre at uni were their living costs during holidays at home (which at around 20 weeks of the year is not insignificant).

As for whether students are likely to pay off their loans, it depends more on the type of job they do rather than the type of degree.  The current threshold before they pay anything back is approaching £27K.  In many professions, salaries are quite a lot lower than that so nothing gets paid back until they get into more senior roles. The average graduate starting salary is currently £23K.  Even with a maths degree, average starting salary is lower than £27K.  City finance jobs are obviously higher.

What is the current threshold for parental income such that a child qualifies for the full loan?

Presumably tax credits and child benefit for other children are ignored?

Is there an allowance if you have other children still at school so the allowable income is higher?

My eldest is in year 11 so would be going to Uni in September 2023 if he wishes. Presumably the assessed tax year would be 2022/2023?

Still working but thinking about retiring early soon, age 57.

I can drain an ISA and spend some PCLS on top of taxable income if the income for a full loan is too low.

Assessed year is 2 years earlier, so 2021/22 tax year for 2023/24 acedemic year. But if income has dropped by 15% or more you can ask for it to be assessed on current year. If they do this, then that year's income is used for the next 2 years too (though you can ask for another current year assessment if income has dropped 15% more). Income used is pretty much taxable income, stuff like pension conts can be deducted but other stuff like gift aid isn't, with a small deduction of 1130 for other children. 

zagfles

MallyGirl said:

It is not bands - it is a gradual scale of contribution vs income 

True for loans, but most unis have bands for bursaries, ie cross a threshold and the bursary drops in steps.

It's worth bearing these in mind as well as the loans, they can be a quite substantial addition and they don't add to the "debt".

zagfles

SouthCoastBoy said:

Yes times have definitely changed. Student accommodation is nothing like I had in the 80s. We had no heating, holes in the ceiling and terrible shabby furniture, but it was only about £18 a week. Left uni with zero debt. I think it was the golden era. 

I left uni with zero debt, but income tax was 29% when I started work. Now it's 20% plus 9% student loan repayment, with much higher thresholds.

pensionpawn

Lostweekend said:

Long time lurker, first ever post,  Fed up/stressed with the corporate world and would love to retire but paralysed by one more year syndrome and worry about children as they get older, most prospective retirees seem to have empty nests. I have read lots of previous posts and looked at the flowcharts etc.  How expensive do the kids get?

Background

I'm 56, wife 54 and 3 kids, twins of 16 still at school and third of 12.  All want to go to Uni.  I am putting together a retirement plan involving SIPPS, BTL and wife's DB income. Will post it on here for a critique one day soon as we are newish to investing (been an interesting first 15 months for us).

Current position

We currently budget for approx £40k a year. If I can retire at the end of this year we should be able to take £40k-£45k using £30k fixed income (DB and BTL) and the remainder at 3% SWR.  Although current income is higher we have been accumulating to make up for decades of misunderstanding finance - all previously in cash ISAs (I know, I know), now in global trackers etc.

The real anxiety is over increased costs when kids go to Uni etc. We have read all about the student loans system and treating it as a graduate tax etc. but nevertheless we would want to help them. We have also not yet had to pay for driving lessons etc. We plan to set aside some capital for the Uni support, probably from wife's lump sum.

Questions

How expensive do post-16 kids get? We don't indulge them but do want to help. I appreciate retiring under 60 is a luxury and I don't want to indulge myself if this means the family are left insecure. Unfortunately part-time isn't an option in my particular area. Of course one more year would put us all in a better position but we could keep saying that, and both parents died youngish without enjoying a decent retirement.  Any views from those who have retired with kids yet to go to Uni, been there/done that would be appreciated.

Thanks for reading

Driving lessons, tutoring (if needed), university visits (as part of UCAS application) all add up. In our experience the cost is proportional to age! If they go to uni the cost goes supernova. My youngest daughter studies at a London university (from her bedroom) and her Halls fees are £12k pa, significantly more than her tuition cost. In fact just one year of accommodation is more than the combined small amount of assistance her elder sisters (who went into employment after their (good) A levels) received to help them buy their own houses (with their respective partners) at age 23! So we intend to continue to work, and continue contributing into our pensions, until she completes her degree in case any unplanned costs emerge. At that point we're going to kick back. We would never have been in a position to retire and support three kids from 18-23, let alone younger (for longer)

bizzie

I found the information available on  Supporting materials - SFE, Practitioners (slc.co.uk) useful as it meant I could work out how much our children would receive given our household income/circumstances.
When SFE then made errors in calculating their awards I was able to identify where/why they had gone wrong which made it easier to discuss and get them to review the application.

pensionpawn

Alexland said:

cfw1994 said:

In some ways, I kind of wanted ours to see a 'conclusion' to my work as they started theirs: perhaps 'happy coincidence' as it turns out - hard to predict this stuff, but I wanted us to be free to help them out as they start off their post-studies life.  It somehow felt wrong (to me!) for them to see me 'quitting' sooner.   Just a very personal viewpoint, I appreciate we are all very different.

I feel the same it would have been nice for my kids to stat work while they were still seeing me work (we're all in this together..) but then if we can get to a position to retire a decade earlier while still making reasonable provision to help them with university and house deposits then it does seem wasteful to keep going to work for show. Maybe we could be that person that pretends to go to work only to sit on a park bench all day?

However the danger is that a lot can change during an early retirement and if the university finances become more onerous or their house deposit help needs to be greater than expected then it would feel bad to say 'this is all the money I have to help you, sorry I retired early and it's now too late to make it up'.

I agree with the psychology that your 'adult' kids seeing their parents still working encourages a healthy attitude to self reliance and self improvement however we have also been keen to communicate to them the options that good pension planning gives them in later life. When your adult kids know that their parents can chose to stop working from 55 that demonstrates that they can control their own affairs if they have a good career. Two of my daughters started their first pension at 18, the youngest at 17.

pensionpawn

jennystarpepper said:

ratechaser said:

Useful discussion - my two are 15 and 17 so Uni is top of mind at the moment. They both have more than enough money coming to them when they are 18 to pay for everything, even if they were doing something crazy long like medicine (and the older one certainly isn't).

Decision point for us is whether we just pay for them or do some sort of split. On the one hand it could be a good early estate planning exercise - it's not going to affect our lifestyle - but on the other hand it's important that they understand the expense and take some responsibility. As the elder one already has a p/t job, I'm not overly concerned there either, we've tried to avoid raising entitled spoilt brats... but I still think there's a way to go in terms of them truly understanding the value of money because they've been fully provided for all their lives.

I encouraged my step children to get part time work and save for uni.  I did tell them that they need to be able to pay their own way for luxuries such as holidays, expensive clothes and phones.  

I just wonder how many other parents do or don't encourage their children to do this? 

All three daughters took up jobs from 6th form onward and the youngest has continued her job into her university years. She works 12 hours each weekend, contributes enough to her pension to trigger an employer contribution of 7.5% and is paying into the company share save to give her a tax free graduation bonus. All part of the self reliance ethos, however Mum & Dad are never too far away with the safety net.