The government should be honest with parents about how much they are expected to pay towards fees, says a recent report commissioned by the government to review university funding.
Overhearing parents talk at a recent sixth form university event we attended underlined the importance of understanding what the student finances mean to both students and parents. A dad asked if it was only one income that was taken into account for means testing the maintenance loan. For the record, it’s the “household” income – so that of both parents living with the child, not just one that dictates the size of loan awarded.
The maximum maintenance loan (for all living costs including accommodation) a student can receive is currently £8,700 (£11,354 if studying in London) paid to the student in three instalments – September, January and April, roughly three 10-week terms. However, eligibility for this loan decreases as the parents’ annual income increases. So if the household income is £25,000 or less, the student should receive the maximum amount. As the income rises the level of maintenance loan awarded decreases. However, what isn’t revealed is the shortfall that parents will have to make up in order for their son or daughter to have the “recommended” income while at university.
As an example if the parental income is £60,000 or more the student will get a minimum maintenance loan of around £4,000 so that implies that parents will have to stump up almost £5,000 a year which works out at around £1,666 a term or £166 a week or £666 a month. This is a lot of money to find out of tax paid income – equivalent to a mortgage! The £4,000 won’t usually even cover the rent.
So it’s important to sit down and work out how much going to university is going to cost at the start of year 12. That way there is a short time for the student to save some money from a part-time job and the parents to work out how they will fund the next three years.