STUDENT FINANCE ADVICE

My son is hopefully going to go to university this year having decided to retake his exams. This decision has meant that he will be far more in debt by the end of his degree – his fees will be £9,000 per year instead of £3,500 and he will owe approximately £30K before he’s even started in the job market. It is a worry as a parent to think of him starting with so much debt – I received some information from The University of Sheffield that I thought I’d share with you – it is important for parents (and your children) to understand the ins and outs of the new system based on accurate facts.

Here is what they say:-

The funding which was previously provided to universities has been drastically reduced by the Government. In the past the majority of the cost was covered by the taxpayer, even if we didn’t ever attend university. The new government policy has decided to shift this cost onto each student who benefits from this level of education.

A few quick facts…

Some universities will charge £9000 per year
Many world-class universities will, from September, be charging £9000/year in tuition fees in order to continue to deliver the highest possible standard of education.

There is no upfront payment
As a graduate, your child will now only begin to pay when they earn £21,000 or over a year (£6000 higher than in previous years) and the monthly installments are much less. However if you want to pay the lot up front, you can.

The payments are based on what your child earns when they graduate
Graduates repay back 9% of their pre-tax annual earnings above £21,000 salary – although this may sound like a large sum, it’s important to remember that your child will actually have more money to play with when they graduate, than current graduates.

What financial support will there be available?
There is a wide range of financial support offered for those wanting to go into higher education. This falls into two main categories: government support and direct money from universities and the amounts available often depend on household income.

Should it be my responsibility, as a parent, to fund my child’s higher education?
You need to decide whether paying for it really is your responsibility as a parent. As tough as this sounds, this revised system has been set up in order for the cost to be met by the beneficiary of the education – your pride and joy! When this is referred to as a ‘loan’ many parents feel guilty and become desperate to avoid their child getting into this debt, even though they may not need to repay it. Yet if we’d called this system a “graduate tax” (as it is simply an addition to the tax they have to pay as a working adult), would you still feel compelled to prevent your child paying a higher tax rate? Of course there is a balance to be had but it’s worth thinking this through to judge your own reaction, and perhaps ask your friends what they plan on doing.

You can find out how much your child will need to pay when they graduate on this website: www.studentfinancecalc.com

Overall, the changes have put a minor bump in the road, however by taking the time to understand and explain these changes to your child, it will ensure that they go head first into higher education and enjoy every minute of it!