Fluffy question alert! Keeping motivated on fire

anonmoose

It just seems nuts 101! I know I haven't been paying attention to the situation over the last 20yrs as I have only now got kids coming to that age but whatever happened to cheap student loans?? I thought the interest rate was quite cheap when I had one. Its crazy how difficult it is for students now.

Anonymous101

Yes think it’s gotten much more difficult since I was a student over 20 years ago.

There are a lot of options for sponsorship or study whilst working in industry and I always recommend these as the best route should the person know what industry they’d like to work in. I know that’s often not the case though, as it wasn’t for me.

MallyGirl

ex-pat_scot said:

michaels said:

ex-pat_scot said:

Kim1965 said:

Children are massively expensive. One through uni, one with only a year to go. The child still at uni was going to have a year in industry next year, then decided  against it. I was so pleased.

We have busted a gut to get our two through uni. I am amazed how support varies from parent to parent. Some people we know and seemingly more affluent, have given little support to their children. They have expected them to get through by working in addition to studying, to support themselves. 
 
 

I am expecting that the "official" regular costs dissipate once the children grow up. The plethora of activities / classes. The endless taxi duties. School fees.

The uni costs are a bit of a conundrum. The maintenance loan is tapered depending on parental income, such that ours get roughly £3,000 pa to live on. That means £1,000 a term to cover food, bills, books, social, travel etc.  £75 per week, annualised.
We make up the difference by paying for the accommodation, which has been typically £500pm for outside London. This seems to be the norm on earlier threads, and in discussions with neighbours in similar situations with children studying. 

London will be much more expensive - and two of ours look set to study there.

It's certainly a sobering thought, as I am keen to wind down well before they finish uni, and will therefore have to account for a large chunk of initial spend out of my pension if I stop between 55 and 60.

That might tip me back into the part time consulting gigs, to earn sufficient to cover these costs.

I don't think it's terribly fair, but since when has fiscal policy and tax been trying to be fair?

As for the more insidious conundrum - when will they actually grow up? And be financially independent? I rather suspect that is much further down the line, and impossible to predict or model financially.

I'm not complaining - far from it - but it's a real challenge for parents to face.

If you stop earning and spend from 'savings' such as ISAs while they are at uni then they will qualify for the full subsistence loan.

Thanks  @michaels - that's certainly an option, but then I end up with disparity, whereby 2 children have lower loans to pay back, and 2 would have higher loans. It's certainly something I'll be looking into.  I also need to look into how pension income is considered for student loan purposes, as I'd be using that in lieu of paid employment.
Frankly, working on a short term contract for a couple of months is not a bad rhythm to get into at 55, and would pay well. One month's net would pay the accommodation for a year for one child.

2 would have lower loans but chances are, with the new rules, they may actually pay them off whereas the 2 with higher loans may not and have some written off after 30 years so it might all come out in the wash.
Then you have children like my daughter who opted for a 6 year course (vet med). She will only ever be paying towards the interest. I did work it all out once - she'll borrow £82,500 and by the time it is written off after 30 years she will still owe over £200k.

michaels

MallyGirl said:

ex-pat_scot said:

michaels said:

ex-pat_scot said:

Kim1965 said:

Children are massively expensive. One through uni, one with only a year to go. The child still at uni was going to have a year in industry next year, then decided  against it. I was so pleased.

We have busted a gut to get our two through uni. I am amazed how support varies from parent to parent. Some people we know and seemingly more affluent, have given little support to their children. They have expected them to get through by working in addition to studying, to support themselves. 
 
 

I am expecting that the "official" regular costs dissipate once the children grow up. The plethora of activities / classes. The endless taxi duties. School fees.

The uni costs are a bit of a conundrum. The maintenance loan is tapered depending on parental income, such that ours get roughly £3,000 pa to live on. That means £1,000 a term to cover food, bills, books, social, travel etc.  £75 per week, annualised.
We make up the difference by paying for the accommodation, which has been typically £500pm for outside London. This seems to be the norm on earlier threads, and in discussions with neighbours in similar situations with children studying. 

London will be much more expensive - and two of ours look set to study there.

It's certainly a sobering thought, as I am keen to wind down well before they finish uni, and will therefore have to account for a large chunk of initial spend out of my pension if I stop between 55 and 60.

That might tip me back into the part time consulting gigs, to earn sufficient to cover these costs.

I don't think it's terribly fair, but since when has fiscal policy and tax been trying to be fair?

As for the more insidious conundrum - when will they actually grow up? And be financially independent? I rather suspect that is much further down the line, and impossible to predict or model financially.

I'm not complaining - far from it - but it's a real challenge for parents to face.

If you stop earning and spend from 'savings' such as ISAs while they are at uni then they will qualify for the full subsistence loan.

Thanks  @michaels - that's certainly an option, but then I end up with disparity, whereby 2 children have lower loans to pay back, and 2 would have higher loans. It's certainly something I'll be looking into.  I also need to look into how pension income is considered for student loan purposes, as I'd be using that in lieu of paid employment.
Frankly, working on a short term contract for a couple of months is not a bad rhythm to get into at 55, and would pay well. One month's net would pay the accommodation for a year for one child.

2 would have lower loans but chances are, with the new rules, they may actually pay them off whereas the 2 with higher loans may not and have some written off after 30 years so it might all come out in the wash.
Then you have children like my daughter who opted for a 6 year course (vet med). She will only ever be paying towards the interest. I did work it all out once - she'll borrow £82,500 and by the time it is written off after 30 years she will still owe over £200k.

How much will she have paid over that period?

With my taxpayer hat on I can quite see why the lender should charge a 'risk adjusted' interest rate, the fact that this is so high sort of suggests we are sending many people to uni for whom it makes zero financial sense.

Are there not commercial lenders offering 'unsecured' loans to those in high earning careers to allow them to repay their loans early?  Surely given the crazy rates their is plenty of scope for everyone to win (except the tax payer as these will be the best payers who have the opportunity to pay their loans off early.

Thinking more it is a very regressive scheme - ok perhaps the lowest earners win but it is the middle earners who pay for this whilst high earners and those bankrolled by BOMAD get out quickly.

Depending on what they study and what their prospects look like it may be that it makes sense for us to lend the DKs their house deposit as a student loan, get them to pay it back and then gift it to them as deposit as we always intend to do....

MallyGirl

When I did the calc she would have paid back just over £100k in 30 years. The numbers are all bigger now as my spreadsheet had RPI at 3.3% and now it looks like it is over 9%.
Vets are not high earners.

Workerbee999

Is the threshold after sal sac pension contributions? If so they could sal sac down to the threshold to build their pension pots to manage levels of loan repayments - just as people do to reduce their tax bills? I would then consider some financial support to top their wages back up as gifts if necessary.

jimi_man

Workerbee999 said:

Is the threshold after sal sac pension contributions? If so they could sal sac down to the threshold to build their pension pots to manage levels of loan repayments - just as people do to reduce their tax bills? I would then consider some financial support to top their wages back up as gifts if necessary.

Yes it is and that’s a perfectly legitimate method to reduce the payments. 

MallyGirl

Workerbee999 said:

Is the threshold after sal sac pension contributions? If so they could sal sac down to the threshold to build their pension pots to manage levels of loan repayments - just as people do to reduce their tax bills? I would then consider some financial support to top their wages back up as gifts if necessary.

I have had the same thought - it would encourage early pension saving and maximise compound growth.

Bimbly

Bringing this back to the original topic, I've been thinking over the last few weeks that I'm going to have to reduce the amount of money I am diverting into my pension. Mortgage payments and energy direct debits alone are costing an extra £100 a month, plus I have to admit being over optimistic with the amount I could save. Not helped by several recent unexpected and large bills (pigeons nesting under solar panels, expensive kitchen repair and dangerous tree).

That's £200 extra in my pocket per month which is probably only going to keep me treading water. I am lucky to be able to do that, as I know there are other people who haven't got money to divert into their pocket. It's one advantage of putting money aside each month (in my pension, in my case) as it means I didn't get used to that higher spending amount in the first place and then have nowhere to go.

Have also been thinking that I probably need to try to up my quality of life as still rather miserable after two pandemic years. That might involve diverting more.

Already coming to the conclusion that retiring at 60 (in 7 years) isn't really affordable and I'll have to go part time instead. But maybe winding down rather than straight quitting would be best from a mental standpoint.

sheslookinhot

A glide path descent is certainly more relaxing than an abrupt change from full time to retirement.