The long freeze on student tuition fees in England has come to an end.
If you have children or grandchildren going to university this year and plan on funding this for them, you should make sure you are factoring in the rise in fees announced by the government.
According to gov.uk, the cost of standard full-time courses is increasing from £9,250 to £ 9,535. This will be the first increase in fees since 2017.
The rise this year could mean the return of annual increases, and in which case an adjustment to your financial plan for the new year ahead may be necessary.
Repayments extended
In their press release the Department for Education’s (DfE) said, “After leaving study, student loan borrowers will not see their monthly student loan repayments increase as a result of these changes.”
While that statement is factually correct, it is rather misleading. New student loans are repayable at a rate of 9% of annual income over £25,000. So, while a higher tuition fee does not mean higher payments, it does mean that payments will go on for longer. This is because the overall debt (plus interest) is greater. The maximum loan repayment term is still 40 years, after which any outstanding amount is written off.
Note: Scotland, Wales and Northern Ireland have their own student finance systems, but don’t be surprised if that new tuition fee of £9,535 is reflected also.
Maintenance loans raised
As well as increasing tuition fees, the DfE also increased the cost of maintenance loans by 3.1%. These are still mostly means-tested on how much parents earn.
Our guidance
If you have children or grandchildren starting university this year, then planning for the financial support they will need is crucial. It may be prudent to start the new year with planning ahead for their journey into higher education.
To get a better overview on funding education and how we can help you manage your financial plan alongside funding university for your family, you can download our guide here. We can provide cashflow modelling to help you effectively plan ahead. We also provide guidance on investing for children and exploring tax efficient ways to invest for your children, helping them build their own funds for their future, including Trusts.
If you’d like a consultation with one of our professional advisers, please don’t hesitate to contact our team.
Important Note
The information contained within this document is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
This article is distributed for educational purposes only and should not be considered financial advice.
If you are unsure about the suitability or otherwise of any product or service, we recommend that you seek professional advice.
The opinions stated in this document are those of the author and do not necessarily represent the view of Progeny and should not be relied upon to make a financial decision.
Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.
