Helping your Family Through University
Students that take a 3-year university course from 2012 face being saddled with an average debt of £50,025 – plus interest! While they won’t begin to make repayments until they are earning over £21,000, recent data has shown that students will need to work for 24 years, on average, before their pension wealth will outstrip their student loan debt.
Dissatisfaction with the burgeoning student debts is a hot topic, with the NUS organising protest marches and the Labour party election pledge to ‘deal with student debt’ during the recent campaign. The Department for Education have, in July 2017, announced a rethink on their proposed rule of interest rates being set at the RPI level of inflation, plus 3%.
In July of this year, Dr Tim Bradshaw, acting director of the Russell Group, called on the government to reconsider the ‘very high’ and ‘out of touch’£21,000 income threshold at which graduates are to begin repaying their loans. Instead he suggests a higher threshold so that graduates can keep more of their money at the start of their careers.
He went further by suggesting that loan repayments could be made through a salary sacrifice which would reduce graduates tax bill. Dr Bradshaw recognises that this would have an impact on government finances however he believes it should be viewed as ‘an investment in the long-term suitability of the UK’s higher education system and in the future of those who study hard for their degrees.’
Many of our client have, historically, been concerned with how to help their grandchildren onto the property ladder; though over the last few years there has been a shift in the number of clients wanting financial advice on how they help their grandchildren, in a tax efficient manner, with the crippling debts they face once they have graduated.
For these conversations with our clients, we share ideas based on each individual situation insuring that the client has the appropriate cash flow to be able to help their grandchildren, whilst still having enough left to enjoy their retirement.
If you would like to discuss how you can support your family through university then please get in touch with an investment adviser at KDW to discuss your options.
Tel: 01727 85 22 99
Email: mail@kdw.co.uk
2nd Floor Centurion House, 136-142 London Road, St Albans, Hertfordshire, AL1 1PQ