The TSR Parents' Guide to Student Finance
Student finance and tuition fees have had a lot of coverage in the British media over the last few years, particularly in relation to the fee rises from £3000 to £9000 a year for entry in 2012. In a lot of cases, the realities have been exaggerated which has lead to a ‘doom and gloom’ situation, with many prospective students, their parents and their teachers feeling that university has become unaffordable or that they have to find ways to cut costs.
However, despite the rise in fees the real cost to the individual is no more “expensive” in 2012 than it was in 2011. The vast majority of graduates will actually end up with lower monthly loan repayments than they would have done if they had started university on the old fee system.
Two important threads to familiarise you with the realities of student finance in 2012 are:
Why £45,000 of debt shouldn’t worry you one bit
2012 Tuition fee rise: Facts, links and myth busters.
In short the new fee structure means that student loans are now only repayable on income over £21,000 in comparison to £15,000 on the old system. This means that 2012 entrants will have an additional £6000 of earnings before they have to pay anything towards their degree. Even above £21,000, an individual's monthly payments will be lower under the new system, so month-to-month they are financially better off. They'll just be paying it back for longer, and after 30 years any outstanding debts will be wiped meaning that only those with high earnings will be required to pay off the full amount.
What are the costs associated with getting a university degree and what support is available?
Firstly, there are two basic costs associated with university:
Tuition fees - These can be up to £9000 a year.
Living costs - These vary dramatically depending on where in the UK your child chooses to go to university, whether they are living at home or renting accommodation and their life style habits. Some students have living costs of around £3500 per academic year whereas other students will run up living costs of three times that amount.
If your child has been an ordinary resident in the UK for at least the last 3 years then they will be eligible for financial support. They will certainly be eligible for a tuition fee loan which will cover their tuition fee costs in full and they will also be eligible for a basic maintenance loan of around £3500 for each academic year. Many students are eligible for much more than this and their eligibility will be determined by your total household income. When applying for Student Finance loans there is the option to apply for the minimum amount of £3500, or to provide financial information for your household to be means tested which may entitle your child to additional loans, grants or bursaries. Approval of Student Finance loans can take quite some time, so the earlier you submit an application the better. You should aim to apply by the end of May for entry in September.
To find out more about student finance in relation to your family situation you can have a look at The Student Finance Hub on The Student Room which is packed with official content written by Student Finance England.
Why you shouldn’t use your savings to fund your child’s degree
If you have savings it is natural to want to financially support your child to avoid them getting into debt by paying for some or all of their tuition fees. However, the best way to help them financially is to put all of this money into a high interest savings account and to take full advantage of the low interest loans and grants available to students. Putting £50,000 into a 5% interest account will add £2,500 to the total each year. Typical repayments of a student loan, however, only amount to a few hundred pounds a year for most graduates. If your child has a starting salary of £25,000 then they will pay back 9% of their salary above £21,000 which amounts to £360 a year, or £30 a month. Remember too that paying on their behalf now means settling the full amount, whereas it is likely that unless your child enters into a very well paid job they will not be required to pay the full amount and any outstanding debt will be wiped after 30 years.
Refraining from paying your child’s tuition fees will mean that all of the money you have saved will still be available after they have graduated and you will have been earning interest on it for the last 3 or 4 years. Once your child has graduated they will be ineligible for the majority of government funding to further their education and so will be heavily reliant on personal savings, a part-time income or financial support from family members. A one year postgraduate degree and living costs will be around the same amount (if not more) as one year of undergraduate study – roughly £15,000. Your child will be unable to access funding for a postgraduate qualification or additional undergraduate studies (necessary for medicine, other NHS careers and law) even if they declined financial support as an undergraduate.
In addition, many graduates often end up in unpaid/low paid internships to help them get onto their chosen career ladder. Your child will more than likely only be able to take up opportunities like this to build up their experience and CV if they have financial backing to help pay for rent and living costs. Alternatively, your child may find themselves in a position after university where they want to buy a house, get married or start a family.
How to help your child before they apply to UCAS
Discuss your child’s financial options with them before they apply to university. What may seem like the cheapest option may not be the most realistic one once travel costs and time have been included.
When making their five UCAS choices your child will need to decide things such as:
The most common problems discussed by students on TSR relate to deciding whether to stay at home or move away for university. Some students will opt for universities close to home because they feel guilty about leaving their parents, then realise later in the application process that their parents did not want or expect for this to happen. Likewise, other students apply for courses hundreds of miles away from home then later find out that their parents assumed that they would be staying locally. Discussing these issues in advance will ensure that your child applies to the most appropriate universities for their situation as UCAS decisions are very hard to undo even if they were only made a few weeks previously.
You may also want to look at the university forums on The Student Room. A lot of universities have their own forum where you can speak to current students, graduates and other people going through the application process to find out about costs or transport options associated with a particular university. Some universities also have official representative accounts used by university staff members to answer questions and provide information.
How to help your child once they have received offers
University specific scholarships, bursaries and fee waivers
Once your child has received an offer from a university they will be inundated with information about scholarships, bursaries and accommodation. It is important that your child reads all of this information when they receive it as many university specific financial packages have application deadlines earlier than the deadline for applicants to reply to their offers. If this is the case then students will be able to apply for a financial package or scholarship before they have accepted the university.
Many universities will try to sway students into placing them as their firm choice (number one choice) on UCAS by offering massive financial rewards. These are offered in a variety of ways from academic scholarships for students who attain high grades, to accommodation and tuition fee discounts, to bursaries for all new undergraduates. These marketing offers are intended to be incredibly tempting and can amount to several thousands of pounds of “free” money. Many applicants using The Student Room often need to be reminded that this is only a good deal if they actually want to go to that university in the first place! It is also important to remember that these offers are often only available to students who place the university as their firm. Those who place the institution as their insurance option (second choice) may not be eligible.
Accommodation
After tuition fees, accommodation will be the single biggest expense. Once your child has received all of their offers it is wise to seriously discuss the potential cost of accommodation at their choices to work out what they can realistically afford and whether you and/or another family member are in a position to support them financially.
The cost of accommodation will vary dramatically depending on both the location of the university and also the type of accommodation chosen. For example, the cost at the University of Edinburgh ranges from £56 a week for a twin/bunk bed room with a shared bathroom in a self catered residence to £230 a week for a superior single room with en suite facilities in a catered residence. Your child will often have to apply for accommodation once they have made their firm and insurance choices. Generally, they will be asked to express preferences and indicate which accommodation options fit with their personal budget. However, this information will just be a guide and the eventual room allocation may cost more or less. When accepting an accommodation offer students will be expected to pay a deposit and may also have to pay rent in advance. This will generally be in advance of the first instalment of the student loan which will not be paid until the university has confirmed that your child is in attendance.
Preparing for university
Excited, enthusiastic students who are moving away from home from the first time can often get very carried away when it comes to buying things for university. Preparing to move away does not need to be a massive financial expense – if your child is in a self catered residence they will be sharing a kitchen with other students. It is unnecessary and pointless for each student to come equipped with a family size set of crockery and utensils. There is also rarely an occurrence that one flat will need to use 6 microwaves, 6 toasters and 6 kettles at the same time! It is therefore advisable that your child waits until they arrive before buying anything beyond the most basic equipment. Similarly, it is also advisable that your child waits until they have attended some classes at university before buying expensive text books. For first year in particular, many of the "essential" books will be easily available in the university library and even those books listed as "necessary" on course readings lists may actually only be used a couple of times.
However, despite the rise in fees the real cost to the individual is no more “expensive” in 2012 than it was in 2011. The vast majority of graduates will actually end up with lower monthly loan repayments than they would have done if they had started university on the old fee system.
Two important threads to familiarise you with the realities of student finance in 2012 are:
Why £45,000 of debt shouldn’t worry you one bit
2012 Tuition fee rise: Facts, links and myth busters.
In short the new fee structure means that student loans are now only repayable on income over £21,000 in comparison to £15,000 on the old system. This means that 2012 entrants will have an additional £6000 of earnings before they have to pay anything towards their degree. Even above £21,000, an individual's monthly payments will be lower under the new system, so month-to-month they are financially better off. They'll just be paying it back for longer, and after 30 years any outstanding debts will be wiped meaning that only those with high earnings will be required to pay off the full amount.
What are the costs associated with getting a university degree and what support is available?
Firstly, there are two basic costs associated with university:
Tuition fees - These can be up to £9000 a year.
Living costs - These vary dramatically depending on where in the UK your child chooses to go to university, whether they are living at home or renting accommodation and their life style habits. Some students have living costs of around £3500 per academic year whereas other students will run up living costs of three times that amount.
If your child has been an ordinary resident in the UK for at least the last 3 years then they will be eligible for financial support. They will certainly be eligible for a tuition fee loan which will cover their tuition fee costs in full and they will also be eligible for a basic maintenance loan of around £3500 for each academic year. Many students are eligible for much more than this and their eligibility will be determined by your total household income. When applying for Student Finance loans there is the option to apply for the minimum amount of £3500, or to provide financial information for your household to be means tested which may entitle your child to additional loans, grants or bursaries. Approval of Student Finance loans can take quite some time, so the earlier you submit an application the better. You should aim to apply by the end of May for entry in September.
To find out more about student finance in relation to your family situation you can have a look at The Student Finance Hub on The Student Room which is packed with official content written by Student Finance England.
Why you shouldn’t use your savings to fund your child’s degree
If you have savings it is natural to want to financially support your child to avoid them getting into debt by paying for some or all of their tuition fees. However, the best way to help them financially is to put all of this money into a high interest savings account and to take full advantage of the low interest loans and grants available to students. Putting £50,000 into a 5% interest account will add £2,500 to the total each year. Typical repayments of a student loan, however, only amount to a few hundred pounds a year for most graduates. If your child has a starting salary of £25,000 then they will pay back 9% of their salary above £21,000 which amounts to £360 a year, or £30 a month. Remember too that paying on their behalf now means settling the full amount, whereas it is likely that unless your child enters into a very well paid job they will not be required to pay the full amount and any outstanding debt will be wiped after 30 years.
Refraining from paying your child’s tuition fees will mean that all of the money you have saved will still be available after they have graduated and you will have been earning interest on it for the last 3 or 4 years. Once your child has graduated they will be ineligible for the majority of government funding to further their education and so will be heavily reliant on personal savings, a part-time income or financial support from family members. A one year postgraduate degree and living costs will be around the same amount (if not more) as one year of undergraduate study – roughly £15,000. Your child will be unable to access funding for a postgraduate qualification or additional undergraduate studies (necessary for medicine, other NHS careers and law) even if they declined financial support as an undergraduate.
In addition, many graduates often end up in unpaid/low paid internships to help them get onto their chosen career ladder. Your child will more than likely only be able to take up opportunities like this to build up their experience and CV if they have financial backing to help pay for rent and living costs. Alternatively, your child may find themselves in a position after university where they want to buy a house, get married or start a family.
How to help your child before they apply to UCAS
Discuss your child’s financial options with them before they apply to university. What may seem like the cheapest option may not be the most realistic one once travel costs and time have been included.
When making their five UCAS choices your child will need to decide things such as:
•
Where they will live – Will they live at home and attend a local university, or will they move away from home?
•
Where in the UK they will go – Students in London are eligible for a higher maintenance loan, but costs can be equally as high (if not more) at other universities where there isn’t additional support. Students from Wales, Northern Ireland and Scotland will pay lower tuition fees if they study in their home nation.
•
How they will get to their university – Are you prepared to help them transport their belongings across the UK at the start/end of each term or is there limit? Your child’s university choices may potentially involve three or more years of overnight stays, ferry trips and long, expensive car journeys.
The most common problems discussed by students on TSR relate to deciding whether to stay at home or move away for university. Some students will opt for universities close to home because they feel guilty about leaving their parents, then realise later in the application process that their parents did not want or expect for this to happen. Likewise, other students apply for courses hundreds of miles away from home then later find out that their parents assumed that they would be staying locally. Discussing these issues in advance will ensure that your child applies to the most appropriate universities for their situation as UCAS decisions are very hard to undo even if they were only made a few weeks previously.
You may also want to look at the university forums on The Student Room. A lot of universities have their own forum where you can speak to current students, graduates and other people going through the application process to find out about costs or transport options associated with a particular university. Some universities also have official representative accounts used by university staff members to answer questions and provide information.
How to help your child once they have received offers
University specific scholarships, bursaries and fee waivers
Once your child has received an offer from a university they will be inundated with information about scholarships, bursaries and accommodation. It is important that your child reads all of this information when they receive it as many university specific financial packages have application deadlines earlier than the deadline for applicants to reply to their offers. If this is the case then students will be able to apply for a financial package or scholarship before they have accepted the university.
Many universities will try to sway students into placing them as their firm choice (number one choice) on UCAS by offering massive financial rewards. These are offered in a variety of ways from academic scholarships for students who attain high grades, to accommodation and tuition fee discounts, to bursaries for all new undergraduates. These marketing offers are intended to be incredibly tempting and can amount to several thousands of pounds of “free” money. Many applicants using The Student Room often need to be reminded that this is only a good deal if they actually want to go to that university in the first place! It is also important to remember that these offers are often only available to students who place the university as their firm. Those who place the institution as their insurance option (second choice) may not be eligible.
Accommodation
After tuition fees, accommodation will be the single biggest expense. Once your child has received all of their offers it is wise to seriously discuss the potential cost of accommodation at their choices to work out what they can realistically afford and whether you and/or another family member are in a position to support them financially.
The cost of accommodation will vary dramatically depending on both the location of the university and also the type of accommodation chosen. For example, the cost at the University of Edinburgh ranges from £56 a week for a twin/bunk bed room with a shared bathroom in a self catered residence to £230 a week for a superior single room with en suite facilities in a catered residence. Your child will often have to apply for accommodation once they have made their firm and insurance choices. Generally, they will be asked to express preferences and indicate which accommodation options fit with their personal budget. However, this information will just be a guide and the eventual room allocation may cost more or less. When accepting an accommodation offer students will be expected to pay a deposit and may also have to pay rent in advance. This will generally be in advance of the first instalment of the student loan which will not be paid until the university has confirmed that your child is in attendance.
Preparing for university
Excited, enthusiastic students who are moving away from home from the first time can often get very carried away when it comes to buying things for university. Preparing to move away does not need to be a massive financial expense – if your child is in a self catered residence they will be sharing a kitchen with other students. It is unnecessary and pointless for each student to come equipped with a family size set of crockery and utensils. There is also rarely an occurrence that one flat will need to use 6 microwaves, 6 toasters and 6 kettles at the same time! It is therefore advisable that your child waits until they arrive before buying anything beyond the most basic equipment. Similarly, it is also advisable that your child waits until they have attended some classes at university before buying expensive text books. For first year in particular, many of the "essential" books will be easily available in the university library and even those books listed as "necessary" on course readings lists may actually only be used a couple of times.
(edited 11 years ago)
2nd child currently receiving offers so looks like an expensive few years. Do student finance take having a child already at Uni into consideration when applying for student loan and maintenance loan? We are unfortunately just over the financial threshold for any grants I believe. Thanks in advance.
Original post by Michelle63
2nd child currently receiving offers so looks like an expensive few years. Do student finance take having a child already at Uni into consideration when applying for student loan and maintenance loan? We are unfortunately just over the financial threshold for any grants I believe. Thanks in advance.
Hi Michelle,
I believe that they do take it into account but it only gives you a couple of hundred pounds extra a year (if that) so it's not something that gives a massive financial contribution, if anything at all. When your older child gets to their final year of university they will receive a lower loan/grant to account for the fact that they will finish university in May and do not need to be supported over the summer.
With your younger child, they should look seriously at the scholarships and bursaries offered by universities. A number of them have massive accommodation discounts for anyone who has the university as their firm and others have scholarship exams where firm offer holders get funding each year regardless of the parental income. Aberystwyth have a programme like this - they give about 25% of their applicants scholarships etc which means they get £1000 for at least the first year plus their conditional offer is converted to an unconditional even though they don't yet have their results.
http://www.moneysavingexpert.com/students/should-i-get-student-loan?utm_source=MSE_Newsletter&utm_medium=Email&utm_term=16-Apr-13&utm_campaign=students&utm_content=66
This is interesting, an article about the benefits or otherwise of paying off your childs student loan. Should I have a started a new thread with it? Sorry, am a newbie, didnt mean to derail the thread!
This is interesting, an article about the benefits or otherwise of paying off your childs student loan. Should I have a started a new thread with it? Sorry, am a newbie, didnt mean to derail the thread!
Time this was updated and few people now get 5% on their savings while students are currently paying 6.3% interest on their debts while at university.
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