Saving for university

[Lili Von Shtupp]

PS, forgot to add, that's only for tuition. That doesn't include room/board and other expenses.

[Fat Bob]

The Guardian says average debts in 2006 were GBP13k and freshers in that year were expecting to pay GBP33k over their course (no idea how long the course, probably 3 years). Put a 3% inflation on those numbers and you get a requirement of GBP56k in 18 years time.

So as a lump sum now, you need to put down GBP20k to get GBP57k in 18 years time (with 6% interest). The other choice is saving GBP1750 a year for 18 years, which gives you similar amounts (and probably less of a heart attack!)

Right, who needs a coin to choose which one goes to uni? Not me!

[Fat Bob]

(I'm a geek, I actually enjoy this...)

Yeah, I'm similar, but I do it in excel, none of these web thingies!

And hell, it's GREAT for scaring parents!

[Aliya]

OMG I did mine with a calculator and a pen and bit of paper lol. Thanks, nice work Ms Schtupp! Still freakin terrifying. But doable )

[Tack]

Aus looks like a better bet because FB's figures are for home students. They have to pay only 3,000 GBP per annum in tuition (2007 figure) whereas internationals would pay 10-19K GBP pa depending on course and uni, rule of thumb is the more prestigeous the uni and the more sciency the course the higher the cost. This does not include living etc. My friend with 3rd year med student kid pays 19K GBP a year just for tuition plus London living

Just fyi Home and EU students can get a loan for the tuition fee (goes straight to uni) and another loan for living of another 3K ish (if they have low income parents can get a non repayable grant on top). The loan is automatically taken from pay when future earnings hit over 15K pa (a small percentage of the over 15K figure), the debt amount rises only by inflation, no extra interest added. Banks will grant another 2K overdraft on student accounts at commercial rates. Even if the kids work parttime and during holidays those without the means tested grant and without extra from parents find it a struggle I understand.

[Fat Bob]

Tack, are you talking UK/EU residents or UK/EU citizens? There are some here that have UK/EU citizenship without having lived in those countries. Not sure how they are charged.

But yes, freakin' scary! I als missed 2 years of inflation off my figures, so make it 6.1% higher.

[Tack]

FB, I deliberately said UK/ EU students because the rules are not straightforward enough to say either citizen or resident. Generally you have to be both in the 3 years to uni start date but there are exceptions. You can certainly be a full UK citizen with no other nationality and pay full International fees! But mine are home students even though they've lived o/s for 10 years. We looked into the rules years ago and did what we needed to do to get home status. As you can see from the uni costs I mentioned it is a really important part of investment planning because of the difference.

[Fat Bob]

Just seen in the Torygraph that the inflation rate used as the interest rate for student loans in the UK is the RPI and not CPI (Retail and Consumer Price Index). Though the CPI is quite low, as it doesn't include housing costs and council tax, whereas the RPI does. The RPI (4.8%) is more than double the CPI (2.3%). CPI is the one used by the UK government to classify "inflation", so it's a little misinformation for you.

(OK, not that I agreee with the sensationalist reporting of this, it's still something to watch out for, or your kids to watch out for!)

Coming out of uni with some debt is not a bad thing. It teaches people to handle this as a managable thing, like mortgages and the like, and hopefully shows them what is "good" in relation to debt and what is "bad". The only problem I see at the moment is the size of the debt the students get into (>GBP10k)

[Burbage]

Get him onto a plumbing course in sixteen years time. Cheaper for you and he'll earn more than a dentist. Possibly even more than a lawyer.

[sluggo]

Yea but he has to let his butt crack show

[azzam]

No, builder's are better. They take their shirts off and wear little leather aprons. Swoon. I know - I've built two houses


Oops, sorry, we're talking about our sons here...

[Fat Bob]

Is anyone else thibking about azzam, yopless, in s little leather apron?

[azzam]

I'm keeping my yop on, thank you.

[Fat Bob]

My word, fingers working much quicker than brain then!

[azzam]

You came over all funny, didn't you?

[Satellite]

Ipaid S$93K study loan off so reason anybody else can't - not too pleasant but might teach them a thing or two about responsibily and financial management.

[daffodil]

Are you saying that because you struggled everyone esle should?

[Burbage]

I think Satellite makes a valuable point however.

By the way. What happens with student loans for women who get married and become housewives. Do they not have to pay off the loan anymore or does the family income have to pay it off?

[Fat Bob]

I think the loan is personal and therefore only she can pay it off. I know when I took mine out (though was with the Student Loans Company and not a bank) then if you hadn't started paying by the time you are 45 then it got wiped off, if you died it got wiped off, and you had to start earning I think 2/3rds of the national average before you started paying.

The amount Sat paid off is high in comparison to what might be expected in the UK as a local student, but yes, it is a valid point. Debt is not bad, it's how one handles it, both while a student and when you start to work.

[Burbage]

So, in effect, housewives, and that rare species, house husbands, don't have to pay back their loan, even if the family income is in the millions?

[BoD]

Yes and no. These days, with high fees, student debt is inevitable. But when I was a student (so so long ago) the education part was basically free. So,the only concern was living expenses. I ended 4 years with pretty much no debt, but knew plenty of others who with much the same income - be it from work, parents or grants - ended up owing a lot. They certainly hadn't learnt that much about financial responsibility

[azzam]

In NZ and I think Oz, it's partially subsidised too. So my son has just a $10,000 debt after four years of study for a fairly expensive degeree, as there are lots of materials and workshop expenses involved. Not too bad. He did also work and get the occasional top up from me when needed, for the times when the scholarship thingie didn't quite stretch. He had a pretty good life during that time though too - had his holidays when he needed them and an exchange in Germany.
That's a lot Satellite. Did you study in the US?

[Tack]

So, in effect, housewives, and that rare species, house husbands, don't have to pay back their loan, even if the family income is in the millions?

If the family income is in the millions then I'm sure a tax or ten will compensate the government! Now while not every educated woman who becomes a housewife makes a great parent I'm pretty sure the resultant offspring will not further burden the social coffers with a particularly high delinquency rate.

With such high take up of "university" places there will be many more defaulters on student loan repayments whose degrees are not of sufficient worth to gain them the requisite income level.

[Satellite]

Are you saying that because you struggled everyone esle should?

Nope . I'm saying debt is part and parcel of life - either the parents pay or the child pays - no two ways about it. Just a matter of which suits you best. Personally, I'm for children paying part for their education just to instil in them the value of money.

And to be fair, I didn't pay the entire lot, I paid 55k-60K and family paid the rest.

[daffodil]

That's still a huge amount of debt for a young person to have to shoulder in my opinion.

But good on you for doing it and I assume in a pretty short timeframe given your such a youngster