Helping your teen afford university

Gone are the days when the government would simply pay the tuition fees for university education. For many parents, helping their kids through uni has become an uphill struggle. Understanding how student loans work, and whether they will cover the costs, is no easy feat - but it’s a vital part of preparing for higher education.

Student loans - how do they work?

Student loans can be mysterious. They don’t function in the same way as normal loans and are different from what we experienced as teenagers - which can lead to some misunderstanding.

The cost of attending university is known as a tuition fee. You are allowed to borrow this money (up to £9,250 per year in England) and when you do so it is paid straight to the university.

University students can also apply for a maintenance loan of up to £9,203 per year (or £12,010 for those in London), dependent on their household income. This is to cover living costs - accommodation, food, textbooks and so on.

Previously, students would only start repaying this loan (with interest) once they were earning over £21,000 per year - but this has now risen to £25,000 per year. This means that if you are earning less than £25,000 per year after university, you won’t pay anything. If you earn more, you will pay back 9% of everything you earn over the threshold.

Will it be enough?

Unfortunately, many students agree that their student loan is not enough - two thirds believe that it is not enough to get by*. In some cases, a maintenance loan isn’t enough to cover rent, let alone pay for other necessities.

This leads to a worry that bright, capable young students will not achieve their potential whilst at university. Perhaps this is the reason that the number of applicants to higher education has fallen in recent years. Should we be worried? Not necessarily - but it is important to be prepared...

helping your teen afford university

How you can help prepare

For many families, affording the costs associated with university isn’t necessarily easy. The importance of thorough research and preparation can’t be overstated! As a parent, there are a few things to consider in advance which could help in the long run.

Applying for Scholarships

There is a plethora of scholarships for prospective university students in need of extra cash. Encourage your teens to search for them - many remain relatively unknown. Scholarships can be awarded for academic excellence, musical or sporting prowess and personal circumstances. The Scholarship Hub is a great place to find out more. Remember - many scholarships struggle to get enough applicants! Your teen’s chances may be higher than you think.

Finding the Best Bank Account

Once your kids turn 18 and enter full-time higher education, they will be eligible for a student bank account. Student bank accounts come with a range of different perks, including railcards, Amazon.com rewards and overdrafts of varying size. Choosing the right one could be a lifesaver! There are plenty of handy guides to help you decide.

Buying the Basics

As Martin Lewis states, at the moment ‘student loans assume a greater parental contribution than many realise.’ The reality for many students is that even between a maintenance loan and a part-time job, just getting by is a struggle. Often, a little help from their parents is the only way.

However, with the costs of everyday living expenses often high on the list (as well as the lure of student nightlife in a big city), a cash injection can often just get lost. Because of this, many parents prefer buying specific items to help their children out. Some of our favourites include; books or vouchers for bookshops, sending food parcels with a few delicious and nutritious snacks and ingredients, toiletries and washing powder (perhaps a bit optimistic) and that all important train ticket home.

As well as arming their teens with financial advice and information, many parents start saving early specifically for higher education. So if you still have younger ones at home, putting away some money each month into a Junior ISA now, could help towards the cost of university by the time fresher’s week starts.

Talking to your teenagers about higher education is an exciting time - however it can be stressful as well. When it comes to saving up for their studies, the more tricks you’ve got up your sleeve the better! Hopefully this article has given you a helping hand.

*https://www.timeshighereducation.com/student/news/students-dont-believe-maintenance-loan-enough-new-research-shows#survey-answer

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