In our Budgeting Clinic series, Tom Francis, head of personal finance at Octopus Money, answers your questions about all things personal finance. Tom is a fully qualified and chartered financial planner. Worried about how your savings are shaping up for the future, or need a plan for how to get out of debt? Drop him an email on [email protected].
Question: Our eldest is due to start university this autumn and we’re trying to get our heads around the student finance decisions before term starts. While they’re academically strong, there’s obviously no guarantee what they’ll earn after graduating. Between tuition fees of around £9,000 a year and approximately £5,000 a year for maintenance, they’d be taking on a significant amount of student debt. We’re fortunate enough that we could afford to help cover some or all of the costs upfront, but we’re unsure whether that’s actually the right thing to do. Does it make more sense to pay some of the costs upfront to help them start with less debt, or to let them take the student loan and support them later if needed?
Answer: This is a question many parents find themselves weighing up as their children approach university, and it is completely understandable to feel conflicted. I want you to understand that in order to perfectly answer this question, you and I would need a crystal ball (I explain why below), so don’t overly stress about getting something wrong here.
Student loans are firmly in the spotlight at the moment, with growing concerns about how much today’s university graduates may end up repaying over their working lives.
Frozen repayment thresholds and the way interest accrues means that repayments can be substantial without ever meaningfully reducing the debt, leaving some graduates repaying for decades, even on decent incomes. What also makes this tricky is that many see going to university (and a degree) as a life experience in itself, as opposed to just a set of keys for interview doors.
However, no parent wants to see their child start adult life with what feels like a large and ever-growing debt burden. At the same time, student loans are a very different kind of obligation to the debts most of us are familiar with, and that difference is crucial when deciding whether paying fees upfront will genuinely improve your child’s long-term financial position.
In practice, a student loan behaves far less like a traditional loan and much more like a time-limited graduate tax. Your child will only start repaying once they earn above a set threshold, currently £28,470 a year for graduates on Plan 2 loans, and repayments are calculated as 9 per cent of income above that level.
If they earn less, they pay nothing. If they earn more, repayments rise gradually with income. Any balance that remains after 40 years is written off. There are no bailiffs, no impact on credit scores, and no expectation that the loan must ever be cleared in full.
However, for many graduates, the reality is that repayments largely go towards covering the interest rather than reducing the debt itself. Even with regular deductions from their pay, the outstanding balance can remain stubbornly high, or even continue to grow, over long periods.
So, paying fees upfront only buys your child financial freedom if you can guarantee that they’ll go on to be a high earner – which for many, is like looking into a crystal ball. Because repayments are based on income, they automatically reduce or stop if a graduate earns less, works part-time, or takes time out of the workplace.
Another consideration is that, with all the external noise around student loan repayments, there is a world in which regulatory change could happen, meaning that paying the costs upfront could be a gamble.
There is also the question of timing. Money used to pay fees now is money you can’t use later and there are often moments after university when parental support can feel especially valuable, whether that’s helping with a house deposit, rental costs or periods of unpaid work.
Equally important is the impact on your own finances. Many parents asking this question are also thinking about retirement, navigating rising mortgage costs, and, in some cases, financially supporting ageing parents.
Using savings to pay university fees may limit your ability to boost pensions, build emergency funds or manage later-life costs. Over time, that can shift financial pressure back onto your children, which is rarely the intended outcome.
This isn’t an all-or-nothing decision. Financial support can take many different forms, and what makes sense will vary from family to family. For some, that might mean helping with living costs in place of, or in addition to, a student maintenance loan, or paying some of the student loan off after university.
Others may choose to set money aside for the future or invest the equivalent money with the intention of helping towards a house deposit later on.
Different considerations tend to sit behind parents’ decisions about support. For some, the focus is on easing short-term pressure or providing reassurance. For others, it’s about preserving flexibility as their child moves into working life.
Different priorities will naturally lead to different choices and taking a step back to clarify what matters most can bring structure to decisions that might otherwise feel overwhelming.
It can also be useful to involve your children in these conversations earlier. Understanding how student loan repayments work, what their likely earning path might look like and how parental support fits into that picture can help set realistic expectations on both sides.
Your next read
square CALLUM MASONOver-50s should pay a graduate tax
square PROPERTY AND MORTGAGESWhy Santander, NatWest and Nationwide are raising mortgage rates
square PENSIONS AND RETIREMENTI’m 70 and flatshare with five people – it’s the only way I can live on my pension
square MONEYI run a salon and now charge £100 for haircuts because of rising taxes and costs
This openness can remove pressure to “solve” everything upfront and instead turns it into a discussion that evolves as circumstances change.
Ultimately, there is no single right answer. The most important thing is understanding the trade-offs involved and making sure that any support sits comfortably alongside your own financial security.
Being clear on what you can afford and what you may need later on, puts you in a far stronger position to support your child in a way that is beneficial for everyone.
Hence then, the article about should i pay my son s university fees upfront instead of him take a student loan was published today ( ) and is available on inews ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
Read More Details
Finally We wish PressBee provided you with enough information of ( Should I pay my son’s university fees upfront, instead of him take a student loan? )
Also on site :
- What it takes to retire comfortably in America: Nearly $1.5 million, Northwestern Mutual says
- Numbrix 9 - April 3
- Europe’s cyber agency blames hacking gangs for massive data breach and leak