You don’t HAVE to go to Uni, but it doesn’t hurt. Well, it does a bit if you just assume you’ll have to borrow all the costs—so, let’s try not to
So, Suki. Right now, she’s an adorable three-year-old whose main concerns are the latest shenanigans in the Bluey household. But before you know it, she’ll be going to school; before you really want it, she’ll be taking competitive exams; and when you absolutely hate it, she’ll be leaving home.
Here’s your problem. Where do you want her to go—and will she be able to do what she wants to? For sure, not everyone is made to go to university, and there are some wonderful degree apprenticeships and non-Higher Education ways to enter professions these days… But if you and your life partner/co-parent are high achievers, you’ll certainly want her (and maybe her younger sibling(s)) to get a degree—like 23% of the rest of British 18-year-olds.
And if you believe headlines or the bloke in the pub who tells you UK students leave with ‘50 grand of debt’ (it’s actually more like £53,000)–or worse… Suki does and decides not to go—combined with scary headlines about AI taking graduate jobs… well, maybe best to go back to watching Bluey and forget about it.
If you have time to head off the need to borrow, use it
But you can’t. It’s her future, both personally and professionally—her lifetime chance. Decisions you and your spouse make now could make all that much easier. And this goes beyond just getting through the three or four years; it’s about how to make the transition and leave the nest as easy for everyone as possible.
I say three or four (it’s the former in England and Wales, normally the latter in Scotland); medicine, architecture, veterinary surgery and dentistry in the UK can be more like 5 to 7, and they may well have to do a year abroad or in industry. Taking out the issue of private education—which is also something you really need to plan for well ahead of time, as we discuss here—and assuming you are not a resident of Scotland, which offers free tuition for a first degree, or you do not have an EU passport and do not intend to get her to apply to Warsaw Uni (which a lot of Irish parents do, incidentally), or you do not have the cash to send her to Harvard (or hope for a sports scholarship), the money side of all this boils down to:
- How am I going to pay for college?
and
- How is our child going to support herself through university?
In England and Wales, you can choose to borrow from the government for both. Buying the baked beans and textbooks and renting the en suite is supposed to come out of something they apply for called a Maintenance Loan. This is means tested against your income, not everyone gets it (indeed, not every family even applies for it).
The point is we are a long, long way from the full grant you had back in your acid house days, and so The Bank of Mum and Dad will need to be on tap to get them through the roof over their head and fizzy lager in the Union Bar part. Sometimes it does feel like there’s some kind of game being played here; whatever the estimated cost of living away at home is, our children can only borrow some, not all of it. (Yes, there are exceptions; no, you’re not that lucky.) In 2025/26, if Uni is away from home and outside London they can borrow a maximum of £10,544, for example, and not at home but studying in London, up to £13,762.
Which brings us to that first problem: the teaching and learning part. After many years, Uni fees are going up—from £9,250 to £9,535. Simple maths will tell you that that’s going to end up with a £28,605 or £38,140 debt out of the gate, and obviously more if it’s a longer course. (Taught Master’s degree costs, by the way, are not capped by the State, so can vary between £10k to £15k.)
So, when people say ‘your kid will leave in ’50 grand of debt’ it is sort of true… but isn’t. Suki will owe a chunk of change to the Treasury, but they will see it as effectively a graduate tax. No one likes paying tax, but the system’s been set up so the nation’s future taxpayers only start paying a proportion of what they’ve borrowed (normally, both Loans), only once they start earning over £27,295.
After having bashed the books for four years (you can only hope), you would certainly hope they’d be earning that and more pretty quickly. Plus, the rate of interest on the ‘50k’ is set pretty affordably—there are various Plans, but the bottom line is 9% of your income over the earnings limit for undergraduate.
That comes out at about £52.02 a month for someone earning (on today’s figures) £33,000 a year. But they will have something to pay, every month, for 30 years, after which time it gets written off.
You don’t want to see all that money go nowhere
OK—lots of numbers. The point is that ideally, we want Suki to not have to borrow money to live off, and if we can we’d look to maybe even not even borrow those £9,000-plus yearly teaching fees.
My view on this: if you have the means, don’t borrow. Yes, the repayment terms are not bad at all, and Suki may not be earning enough for it to be a bite, but who wants to pay 9% more tax than they have to? And it’d be nice for her to enter the job market without any debt.
When you read that many students will never pay back the full amount they borrow to go to university, with only 25% of those who started full-time undergraduate degrees in 2020 paying back their loan in full… well, you don’t want your kid to never earn enough for that to be her situation, now do you?
So, let’s help her out. But if you don’t have the money now, you should also do all you can not to borrow, either. If Suki is three now, you have 15 years to help her out. Figure £12,000 (at today’s costs, which are only getting higher thanks to inflation) and round up to £10,000 for the dons and lab side—£22,000 a year x 3, £66,000-£70,000, or £4,600 and change per year.
That’s doable. And you should try, making your child’s education part of your overall financial plan. Let her borrow the money if she wants to (she may reject your helicopter parenting!), or if you need the liquidity don’t save, but it’s really worth striving to give her at least some, and ideally ALL, of the bill.
How to build a Uni sovereign fund
£4-5,000 a year may not be affordable, or you may have been blessed with a big family. But you have some time, and inflation notwithstanding, the gift of compound annual growth on your side. That doesn’t mean there’ll be no work on your part; making ‘Uni Costs’ a line item in your budget and annual financial budget would also mean not just current plans might have to change, but future ones: could making regular contributions from your income affect your lifestyle or other long-term goals? Or if you want to pay for her at the time not now, how would taking a lump sum out of your investment portfolio to pay for accommodation affect your retirement plans?
If you do want to save now, look at ways to make every penny count and help to that £70,000-plus war chest. Junior ISAs could work very nicely here, as they are a very good funding vehicle because they can only be accessed from the age of 18.
You should also be looking at other savings and investment vehicles, too, but you can actually do some character building too and get Suki to help. Why? Because it’s super-important to educate our children financially to think of their own futures, as they stand to gain enormously from Uni (the IFS says the discounted difference in lifetime earnings between graduates and non-graduates is £430,00 for men and £260,000 for women).
So, tell them that JISA money is theirs, but blowing it on an expensive holiday or a BMW at 18 isn’t the best return. And on the way, get the kids to do some work as well, part time or full time during the long holidays, as they can develop some healthy finance mindsets and see the value of both money and hard work nice and early.
Bottom line: it is not disastrous if you can’t afford not to, or think you will never be able to, but if you have the runway, discipline and dedication to your family’s welfare to do it, start building a special Uni costs line of saving and investing right now. But to maximise your efforts, come and chat with me to see how I can make those 15 or more years as pain-free as we can manage between us.
- This blog is for information purposes and does not constitute financial advice, which should be based on your individual circumstances.
- The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
- The value of investments and any income from them can go down as well as up, and you may not get back the amount originally invested