Should parents pay their child's student loans or tuition fees?

Parents across the country are divided over whether to pay university tuition upfront or help clear growing graduate debts. Young people now leave university with just over £50,000 on average; almost 180,000 owe more than £100,000 and one graduate has a £314,000 balance.

A survey of 2,000 UK parents aged 45 to 65 for Octopus Money found 11% had paid some or all tuition fees upfront and 5% had helped make overpayments after graduation. There are two types of student finance: a tuition fee loan paid directly to the university and a maintenance loan for living costs.

Interest is charged from the first payment until the loan is repaid or written off, and repayments are 9% of earnings above the plan threshold — currently £25,000 for plan 5 and £28,470 for plan 2. Plan 5 loans are written off after 40 years and plan 2 after 30, and plan 5 interest is linked to RPI (3.2%) versus between 3.2% and 6.2% for plan 2.

United Kingdom

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