If you are able, it seems attractive to help with paying university fees as part of doing everything you can to ensure your child has a bright financial future. However, there are two key considerations when thinking about helping your child with university costs. These are:

1. Maintenance and living costs
2. Future financial requirements

Maintenance loan eligibility
Once your household income exceeds £62,000, your child is only eligible for 46.6% of the maintenance student loan, assuming they are living away from home, but not in London. For those living away from home in London, your child is eligible for 49.8% of the maintenance loan for households with an income of over £70,000.

The total maximum maintenance loan a student can receive while living away from home is £10,227 – or £13,348 if living in London – which is seen as the required amount to live on while at university. However, because the size of a maintenance loan is based on parental income, it is implied by the government that the gap between the maximum loan and the loan your child is eligible for should be bridged by parental contributions. So, for a household income of over £62,000, a gap of £5,461.22 will need to be bridged. If you want to help with university fees, contributing to your child’s living cost before paying tuition fees would likely be the best thing to do.

Paying off student loans vs future financial considerations
If you are thinking about paying off your child’s student loans, it is worth noting that any payments are non refundable. If your child can access enough money to live on at university and you want to help them financially, it would – in most cases – be best to utilise this money for future financial demands such as a deposit on a house.

However, there are cases in which paying off your child’s student loan would be the better option for them. For example, if they are likely to be a high earner, and are therefore likely to pay back the whole loan (52% do), then paying off the loan would be prudent. Or, even more prudent, and if you are in a financial position to do so, would be to not take a loan out at all.

Unless you are comfortably able to pay tuition fees, supplement living costs, and potentially assist in the future, taking out a maintenance loan is likely a good idea. By taking the loan, you have until April after your child’s course finishes (when repayment starts) to assess what kind of earner they will be, and therefore how important it is that you help pay tuition fees.

In summary, the two key considerations of living and maintenance costs plus your child’s future financial requirements should take priority over paying tuition fees.

If you wish to find out more about student loans and what the best decision may be for you, please contact your adviser.