From 2024 - How and how much financial support to give our children through university and beyond

LL_USS

Good morning everyone

This is the beginning of year 2024. I am not sure how many parents out there in the forum that are battling through cost of living crisis whilst working out how and how much to help our children through university and beyond.

I am a single earner of the family. My son is going to university from this September (his sister to follow suit a few years later). We have not applied for student loans for him yet (it is around May time to apply I think).

(1) It is a hypothetical question as we will need the loans, but I still keep thinking about it. I have talked among a group of friends who have kids at uni or going to uni. Most of us, if not all, are careful with money and financial planning and we have been sharing information regarding student loans (many of which from Martin Lewis himself). A few of us still insist "if you can pay, then the best gift for kids is to pay for their uni then they can start their life after uni without a student loan that haunts them for the rest of their working life. Uncertainty in policies is another factor too". A few of us, on the other hand, say "we can help but I'd rather use that money with free interest (only RPI on top of the loan) so I'll use spare money to help them another way".

(2) leaving this hypothetical question aside, i know that even when we maximise the loan that we can borrow, I will need to top it up. It is all in the news how students are struggling living merely on the loan and lack of topping up/ or insufficient topping up from parents. So my plan is trying to borrow maximum what is allowed for our case, using all that loan (and my topping up) to cover my son's living costs at uni. Any spare money I can put aside, I won't use it to reduce loan/ loan overpayment but to use to help him another way.

(3) what is another way to help: I know that on MSE forum, there are different opinions of how much to help kids, some even say it is unfair to use the bank of mums and dads as it ruins the housing market. But I would like to help my kids where and when I can. I know they are good kids and they are working hard at school - they do what they need to do. I will just tell them when I help them "this is my retirement money, please look after it". I will be playing by ear, seeing how my kids turn out to be, which uni they go to, where they can live, will they live there to look for jobs too, the state of the housing market etc.... and mould our plan as we go along. If I help kids buying, there will be implications of legal paperwork, what if they live with their girlfriend/ boyfriend etc. But perhaps those questions come a bit later.

There is so much to consider and prepare. I have to tell myself not to panic and that if I don't do anything, my kids can still manage somehow. If I help, it may be easier for them but let's not put myself at too much of hard work and worries.

Anyone having your story to share of how and how much to help our children, please do.

amanda1024

The top down estimates from Martin give a rough figure - but actual living costs will depend: which university, whether in ‘halls’ or private rental, whether catered or cooking for themselves, whether luxury/en-suite or minimalist. Plus depending on subject there are often costs on top of tuition fees for equipment, books etc. And that’s leaving aside stuff like how much they might eat out/socialise.

My personal experience (although a few years now): even in halls, my maintenance loan was pretty much all taken up by the rent + associated costs, so my parents carried on giving me the same pocket money they had when I was at home (c. £50 a month). The first year was definitely a struggle, but after that I got jobs during the summer holidays so for the other years I had that to draw on; I even managed to get sponsored, by the company I worked for after the second year, for my third and fourth years, so ended uni with a small lump sum to build into a deposit for a house. If you can afford to be a bit more generous I’m sure your children will thank you - but it would be worth having a discussion so you have a shared understanding about what the money is and isn’t intended to be spent on.

Flugelhorn

my 2 got the standard loan - no way would this have covered the accommodation costs, so they lived on the loan and I paid the accommodation costs 

LL_USS

amanda1024 said:

...If you can afford to be a bit more generous I’m sure your children will thank you - but it would be worth having a discussion so you have a shared understanding about what the money is and isn’t intended to be spent on.

Thank you @amanda1024. I am still working it out but yes, noted, I will be very careful and clear about what the money is about. For e.g. I am sure he will need to spend to the last penny from the student loan as it is not much, and I will agree to add extra support (my calculation is about £186 more than what I am spending on him now) till the end of his degree. But as long as he still has my support, any money he saves or extra money from working part-time at uni should put into a saving account that can be shown to me from time to time so we can see how much we need on top when helping him to buy. 

I think it depends on different children. My boy is fine showing his bank accounts and discuss finance with me (he just got his Child Trust Fund paid plus a bit of money earned from side jobs, and we discussed what to do with it and in the end he transfered it into a saving account, which becomes emergency fund for uni, aside student loan and what I top up into his current account to use.

When i help him to buy we will agree how much I "lend" him and it is not free money.

LL_USS

Flugelhorn said:

my 2 got the standard loan - no way would this have covered the accommodation costs, so they lived on the loan and I paid the accommodation costs 

Thanks @Flugelhorn. My rough calculation is he will need to use all of the loan to pay for tuition fees and a part of living costs, on top of that he will need £558/m (not too far off your case, just maybe because we can borrow more as we have less household income). I am already spending on average £372 on him (food, tutor, music, sports, pocket money for teaching his sibling or do anything beyond shared house chores that I would need to hire someone to do, like trimming a tree, of course just paying a reduced rate for a non-professional ). So it will be £186 extra I will need to put aside when he goes to uni. This means I will contribute less to pension to maintain the same level of saving, which will be paid into my ISAs till i withdraw that "retirement money" to let him use to buy a place, perhaps. Still all balls in the air. Many may just be inspiration - but let's see what can work out.

annabanana82

Accommodation costs vary hugely. 

I have two children currently at uni, both get the full loan of circa £9k. Child one, accommodation costs £6k p/a I give them £30 a week for food, I also pay for mobile phone, and pay for their bike MOT, service and tax. They work during the holidays and probably earn about £1800 a year on NMW. They manage to live, go the gym, go to a festival and just been away for a weekend. They also have a not cheap hobby of games workshop that they indulge in.

Child two was offered Accommodation in an undesirable part of the city, this would have been £8500 a year, plus £500 bus fare a year. They were lucky to have family on the bus route to uni so stay there at a much reduced rent. They also work 10-16 hours a week and able to save and live really well. 

I know some on minimum loan that was offered UWE, again Accommodation was £8500, they decided to go to Cardiff where Accommodation is only £5000 a year. 

I realise I have it pretty easy at the moment, when the youngest goes I'm sure it's going to be much more expensive.

Spendless

Both my 2 have received min loan. Eldest we paid accommodation cost in full, he lived on his loan. Youngest got a last minute offer. She comes under London where rent is sky high. For this year we have taken her student rent and added to it, then we send her monthly money to live on. She struggles to keep to a budget. Next year I'm hoping we're in a position to say we will pay full rent  you live off your loan. 

LL_USS

Thank you everyone.

I have only started to work out some numbers; it seems I still have lots of wild guesses, so it is very useful to hear the cost breakdowns from others who have had the experience.

I have only roughtly calculated how much max we can get on student loan. I suppose the annual earnings is after pension contribtion (is this right?) so it will be under 50K/year for the household, which means we can borrow about 9,624K/year for maintenance, if studying away from home in London. This is only £802 a month. Student accommodation is already £1125/m minimum mimimum. Food, bus, spending about £235/m (I just put some guesses in the spreadsheet ;-). 

After using £802 from student loan for maintenance, he needs me to to top up £558/m. I am already spending about 372/m on him, so it is an extra £186 from me, at least.

He has got an offer from a uni up north, which will be cheapest in living costs but if he can choose where he goes, I would like him to be where there are more opportunities for jobs.

@annabanana82 you use full loan for your kids, whilst @Spendless you use minimum loan.
I feel I have a choice of paying more into my son's university costs but I am trying to keep the same level of spending and saving (only putting in an extra of £186/m) and keep on saving, to aim at helping him to buy when it's time.

So it is the choice between "paying more to uni costs from pocket” or "borrowing max and saving max". My feeling is to go with the latter; if they need to buy most modest place in a big city then we will need every penny. Do I think too far or should I just chill and let them sort out themselves?

annabanana82

I'm not sure how much of a choice you have in what you are given loan wise? I thought it was just calculated on household income? 

My eldest two get max as its only me earning (£45k) I also have another younger dependent so they get a little more than the calculator says. 

I think you may be overthinking a little, if they want to move to London and buy then that's kind of on them to put the donkey work into saving a deposit. 
Don't get me wrong, I will help my children as much as I can, but continuing to hand out cash isn't always the right help. 

Them learning to budget and live within their means is one of the best gifts you can give them

400ixl

There is the course funding which most universities charge the same amount for.

You then have the maintenance loan which is means tested against the household income and has a London and non-London element. This is the part people will be talking about as it is the only one that can be used for the living element. The student can claim less than their entitlement if they wish though, but doubt many do.

For our daughter she get the lowest amount of maintenance loan they give. This is enough for her live on as we pay for her accommodation, phone and car (insurance, tax etc, she doe her petrol). 

Spendless

Don't forget they are not away all year. It's likely that they'll be away from mid/late Sept to mid May but does depend on the institution and course. My youngest also did Oct-June and her current course is Aug-May (and had a v long Xmas break to make it in line with the other courses). If they spend 1st year in Uni halls often that contract isn't a full year either. Private rents are usually for 12 months.

When you say jobs are you meaning as a student or once they graduate? I had the same view with my eldest, he refused to listen and went to the cheaper option anyway. There were advantages and disadvantages to this. He met his now wife at Uni and after graduation and a brief stay at his ILs (where there were even less opportunities) he returned to where we live to settle and find work. It is quite possible your son would return to home turf after degree, even if not as a permanent move.

I'm guessing you've used this calculator to give you an idea of how much can be borrowed for maintenance loan?

https://www.gov.uk/student-finance-calculator