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News, Student Debt

“University finance is just the beginning of many happy returns”

According to the National Union of Students (NUS), the average living costs of a university student total around £12,000-13,000 a year. Add on the average tuition fees – expected to exceed £8,000 a year from 2012 – and a university education could set your child back more than £60,000.

“Going to university today means young people are likely to end up in debt,” says financial adviser Adrian Lowcock from Bestinvest. “That goes against the philosophy with which many parents were brought up. But don’t be afraid to let them invest in their own future through borrowing.”

From 2012, all students will be able to get a non-means-tested loan of up to £9,000 per year for tuition fees and a partially means-tested loan for living expenses. Most financial experts agree this is a very good deal. Interest rates are modest and graduates will only have to repay once they start earning more than £21,000 per year. After 30 years, any remaining balance will be written off, so graduates who take low-paid jobs or become full-time carers may never have to repay in full.

Students from households with an income below £42,600 will also be eligible for a non-repayable means-tested grant of up to £3,250 per year. Further help in the form of bursaries and scholarships is also available. Some universities sponsor high achievers in their field or those who want to study with a view to working in areas that have a skills shortage, and all three armed services have bursaries available. Commercial funding for subjects such as business or engineering is sometimes offered, but competition is high.

Most students also top up grant money with part-time work, but when it comes to maximising income the most cost-effective solution is for them to remain living at home. It’s therefore ideal if their university is nearby as this can reduce annual expenditure by up to £5,000.”

Original article

A more radical option that’s gaining in popularity is for parents to buy a property for the student to live in. You need to decide whether you’re doing this as a gift to your child or as an investment, says Lowcock; if it’s the latter, be as businesslike as any commercial landlord.

Comment: WOW! Just wow, some people are either rich, or just plane foolish.

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