Stabbed in the savings
Many parents worry that their children will leave university saddled with enormous student loans.
The terrifying truth?
Student loans aren’t big enough.
With horrendous headlines about students graduating with average debts of more than £50,000, that might seem ridiculous.
But the reality is:
- Maintenance loan limits are too low, so students can’t borrow enough to cover their living costs
- Many students can borrow even less, because parents earning more than £25,000 a year are expected to make up the difference.
So as a parent, stop worrying about how your offspring will repay loans in the future. The good news is that student loan repayments work like a tax, so repayments are limited to a percentage of income and only start when your child is earning above a certain amount.
Instead, start worrying about how on earth you’ll magic up hundreds of pounds a month you’re expected to contribute while your child is still studying. More than one child? You’re looking at even bigger bills.
What are student loans?
There are two types of official student loans to help towards further education costs:
- Tuition fee loans, which cover (you’ve guessed it) tuition fees for uni courses
- Maintenance loans for living costs like rent, heating and eating.
Now the student loan system is hideously tangled, and details depend on whether you live and study in England, Scotland, Wales or Northern Ireland. I’m going to talk about the English situation, because hey, that’s where I live.
Tuition fee loans are pretty simple. A full time student starting in September can borrow up to £9,250 a year as a tuition fee loan, and that money goes straight to their course to cover fees. Fine.
But maintenance loans are where it wallops many parents in the wallet.
What’s the maximum maintenance loan?
The maximum amount students can borrow for living costs depends whether they live at home while studying, or live away in London, elsewhere, or abroad. (Told you it was complicated)
So the limits for students starting a full-time course for the first time last September, for the 2018 to 2019 academic year are:
Living at home: up to £7,324
Living away from home, outside London: up to £8,700
Living away from home, in London: up to £11,354
Year studying abroad: up to £9,963
Let’s take a student who heads off to uni outside London. The maximum they can borrow towards living costs is £8,700, tops.
To put that in context, it’s only slightly more than the full new State Pension at £8,546.20 a year. We’re not talking mega bucks.
Even the maximum only works out as £725 a month, or £167 a week for everything: rent, utility bills, transport, books, clothes, toiletries and little things like food.
Not even enough for noodles
When do students get less?
However, many students don’t get the maximum, because maintenance loans are means-tested. The amount they can borrow is limited by family income, which includes how much their parents earn.
When applying for student loans, anyone under 25 has to give details of their parents’ income, or parent and partner, if that’s who they’re living with before uni.
Earn more than £25,000 a year, which, let’s not forget, is less than national average earnings?
Your child can borrow less, and you’re expected to stump up the difference. Of course the Student Loans company doesn’t actually produce a statement saying ‘parental contribution £x’ – that would be too easy! Nor do they give students any way to enforce extra payments. No, they just cut the amount students can borrow, and let them whistle for the difference.
How much less?
The Student Loans Company starts slashing the amount a student can borrow as soon as their parents’ income tips over £25,000.
We’ll stick with the example of a student who headed away from home last September for a full time course outside London.
(For more examples, check out the handy dandy table over on Save the Student or plug your own figures into the student finance calculator on GOV.UK)
Earn say £30,000 a year, and the max your child can borrow is £8,076 not £8,700. As a parent, you’re supposed to find £634 a year out of thin air. And that’s before anything extra needed because maximum maintenance loans are too low.
You might still be a basic rate taxpayer, on £46,350 a year, and the maintenance loan drops to £6,035. That’s a difference of £2,665 from the maximum. Do you have a spare £222 every month to top up your child’s living costs?
Once household income passes £62,215 a year, that maintenance loan when living away outside London gets sliced down to the minimum: £4,054 a year. A gap of £4,646 compared to the max maintenance loan. £387 a month. Ouch.
So if you’re a family that gets hit by the high income Child Benefit tax charge (ie income over £60,000 a year) when your kids are young, you’re also likely to get hammered by minimum maintenance loans when they reach uni.
Right now, higher earners with children applying for the highest maintenance loans, when studying away from home in London, are effectively expected to contribute £17,100 towards a three-year course.
Little left to live on
How do loans compare to living costs?
Trouble is, even matching the full maintenance loan may not be enough.
Accommodation eats away the biggest chunk of student living costs. Obviously, rent will vary a lot depending on where your child studies, and the type of accommodation (London vs Leicester, uni halls vs private landlord, uber glam vs grotty shared slum).
Across the UK, the national average for student rent was £131 a week, according to Save the Student’s National Student Accommodation Survey 2018. Yet the average maintenance loan payment was just £139 a week – leaving £8 a week to cover all other costs. £8!!!!!
No wonder 61% of students who get a maintenance loan say it’s not enough to live on. Many added that it didn’t even cover their rent, let alone anything else. Rent is likely to be way more than the maintenance loans for children from higher earning families, with absolutely zip all left over.
No wonder Save the Student found:
- 44% of students struggle to keep up with their rent
- 45% said the cost of accommodation affected their mental health
- 31% said it affected their studies too.
So many children will need extra cash on top.
What can parents do?
As a parent, I’d like my kids to go to uni without being afraid they can’t afford it.
I can try to teach them budgeting skills and encourage them to save themselves, get jobs in the holidays, manage other borrowing and apply for any grant, bursary or scholarship going.
But fundamentally, I’ll need to save now and save hard to top up their student loans, if I want them to study without starving. For parents who face forking out up to £17,000 towards limited living costs – start saving now!
Now – over to you. Did you have any idea how much you might be expected to pay towards your children’s uni costs? Do share in the comments, I’d love to hear.
Pin for later:
We had 2 at Uni at virtually the same time. It was a horrendous time for us financially – like having 2 more mortgages! The greedy landlords charged a fortune for basically slum living! Now they’re both paying back their loans – daughter’s is about 55k as her uni tuition was 9k/yr x 4 yrs – then interest is added. The courses weren’t value for money – even though they were ‘russell group unis’. I hear that some fiancial institutions do indeed count them as debt when applying for mortgages, etc.
Author
Your comment about having two more mortgages really struck a chord with me, as the loan system is based on such chunky payments from parents. The focus on the burden of loans on students, and how long they’ll be paying them off in future, seems to ignore the immediate expense for many parents.
Investment is one of the best ways to achieve financial freedom. For a beginner there are so many challenges you face. It’s hard to know how to get started. Trading on the Cryptocurrency market has really been a life changer for me. I almost gave up on crypto at some point not until saw a recommendation on Elon musk successfully success story and I got a proficient trader/broker Mr Bernie Doran , he gave me all the information required to succeed in trading. I made more profit than I could ever imagine. I’m not here to converse much but to share my testimony; I have made total profit returns of $20,500 from an investment of just $2000 within 1 week. Thanks to Mr Bernie I’m really grateful,I have been able to make a great returns trading with his signals and strategies .I urge anyone interested in INVESTMENT to take bold step in investing in the Cryptocurrency Market, he can also help you recover your lost funds, you can reach him on WhatsApp : +1(424) 285-0682 or his Gmail : BERNIEDORANSIGNALS@GMAIL.COM tell him I referred you
We currently have 2 at uni (and 2 still at home) Eldest is in the final year but is likely to do a PhD next year and No 2 is in Y1 of a 7 year course….!!!!! (by which time no 3 will likely be at uni, shortly followed by No 4 if they go) Thankfully 1 + 2 are both at uni in Wales – the cost of living there is much cheaper than many other cities we looked at – although this did not influence their choices in any way – they chose the right course and uni for them. We essentially pay their rent for them and the min student loan they get covers living fees in the main (thankfully both are low maintenance, jeans & hoodies types (with jeans from H&M, so not expensive)) We send them back each semester with huge food parcels (probably about £50 – 60 worth each) and cleaning items and large packs of loo rolls 🙂 My mum also puts £50/ mth in their bank accounts. It *does* impact on our ability to do other things, for sure.
I just want to say Thank You to everyone who supported me through the years. My name is Manuel Franco, New Berlin, Wisconsin. My story of how I won the Powerball lottery of $768.4M is a bit of a tale. I have been playing Powerball tickets for 6 years now since I turned 18. I bought my first ticket on my 18 birthday. I was feeling very lucky that day because I had contacted Dr. Odunga Michael to help me with the winning Powerball numbers. I really had that great great feeling that I looked at the camera wanting to wink at it. I only did a tiny part of it and trusted him. He gave me the numbers after I played a couple other tickets along with it for $10. I checked my ticket after the winnings came online and saw the numbers were correct including the Power play. I screamed for about 10 minutes because it felt like a dream. I had won $768.4M. You can check my winning testimony with the lottery officials just with my name search. Thank you Dr Odunga. Well, his email is odungaspelltemple@gmail.com and you can also call or Whats-app him at +2348167159012 so you guys can contact him
Hey! Do you want to capture interesting moments on your Mac? Then you should definitely try Movavi Screen Recorder for Mac! With this program, it will be easy for you to record videos from your screen, take screenshots, and capture audio from various sources. Record your gameplay, video chats, video tutorials, and much more in high quality. Try Movavi Screen Recorder for Mac right now and check out all its features!
Don’t forget to visit https://www.movavi.com/screen-recorder-mac/ for more information!
Real spell casters are hard to find but I am happy to thank Lord Krish for helping me win the lottery successfully after trying so many spell casters and I found my happiness in Lord Krish. I was given the lottery numbers by him which made me the third highest lottery winner in history and this is all thanks to you sir. Winning the lottery is something everyone would like to feel especially with a trustworthy spell caster. I, Yanira Alvarez, won the Powerball lottery in Los Angeles and I really thank Lord Krish because after I contacted him, he told me to only provide the spiritual items for him to do it for me and I didn’t hesitate to give him what he required so I could win it. I have tried so many spell casters who seemed real but only Lord Krish numbers gave me the winnings. I won the Powerball Jackpot of $1.08 billion and I am here today to share my experience to those willing to win the lottery as well. Take this opportunity to contact Lord Krish Spiritual with his email: lordkrishshrine@gmail.com and also share your experience with others.
VISIT GEO COORDINATES RECOVERY HACKER TO GET YOUR MONEY, STOLEN FUNDS, OR BTC RETURNED?
My purpose out here today is to share this article to the world about how GEO COORDINATES RECOVERY HACKER helped me in getting my lost funds back. Losing your life savings to scammers it’s not a good feeling, I lost everything, even sold some properties, I didn’t even know where to start from, I invested $72,000, which i was promised to get my first 15% profit in weeks, when it’s time to get my profits, I got to know the company was bogus, they kept asking me to invest more and i ran out of patience then requested to have my money back, they refused to answer nor refund my funds. I had contacted a few crypto recovery agents but they were all unprofessional not, until a friend of mine introduced me to this hacker called GEO COORDINATES RECOVERY HACKER. It gladdens my heart to be out here to share with you my incredible experience working with the recovery hacker called GEO COORDINATES RECOVERY HACKER. I must confess that it was the best decision that I made because my stolen Bitcoin was successfully returned to me. So for those who are victims, don’t let those unfortunate scammers get away with your hard-earned money. You can rely on your expertise. They have previously handled many successful cases. In order to get your stolen assets recovered Kindly contact them via
Email: (geovcoordinateshacker@protonme)
Email: (geovcoordinateshacker@gmail.com)
WhatsApp ( +1 (512) 550 1646)
Website; https://geovcoordinateshac.wixsite.com/geo-coordinates-hack
I have been browsing on-line greater than 3 hours nowadays, yet I by no means found any interesting article like yours It?¦s lovely price enough for me Personally, if all site owners and bloggers made just right content material as you did, the net might be a lot more helpful than ever before
very good publish, i definitely love this web site, keep on it
Its good as your other posts : D, thankyou for posting.
It’s really a nice and useful piece of info. I’m glad that you shared this helpful information with us. Please keep us up to date like this. Thanks for sharing.
Precisely what I was looking for, thanks for putting up.
Some times its a pain in the ass to read what blog owners wrote but this site is really user genial! .
Spot on with this write-up, I truly assume this website needs way more consideration. I’ll in all probability be once more to learn far more, thanks for that info.
You got a very superb website, Gladiola I noticed it through yahoo.
My brother suggested I might like this website. He was totally right. This post actually made my day. You cann’t imagine simply how much time I had spent for this info! Thanks!
Right now it looks like BlogEngine is the best blogging platform out there right now. (from what I’ve read) Is that what you are using on your blog?
You really make it seem so easy with your presentation but I find this matter to be actually something that I think I’d never understand. It sort of feels too complex and extremely wide for me. I am having a look forward for your subsequent put up, I’ll try to get the hold of it!
I haven’t checked in here for a while since I thought it was getting boring, but the last few posts are good quality so I guess I’ll add you back to my daily bloglist. You deserve it my friend 🙂
It’s actually a nice and helpful piece of information. I’m glad that you shared this useful information with us. Please keep us informed like this. Thanks for sharing.
Hey, you used to write great, but the last few posts have been kinda boringK I miss your tremendous writings. Past several posts are just a little out of track! come on!
I don’t normally comment but I gotta say thanks for the post on this amazing one : D.