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Student debts - should parents pay them off?

Student debts - should parents pay them off?

Category: Loans

Updated: 09/10/2017
First Published: 16/10/2007

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This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

A recent survey by the Halifax has shown that nearly two thirds of parents would use their salary to put their children through university, to prevent them being saddled with debt on graduation.

The survey also found:

  • 11% of parents would consider taking out an unsecured personal loan to help their children
  • 10% would consider remortgaging
  • 31% would dip into retirement savings
  • Only 16% said that they would not be prepared to make any sacrifices
It's certainly an interesting debate. What would you do?

Yes - I plan to pay off my child's student debt

  • Graduating with thousands of pounds worth of debt can be quite daunting, and leave them feeling overwhelmed and burdened
  • Many students do find it hard to get a job after graduating, so paying off their debt will give them both confidence and a fresh start
  • When they get a job, paying off student debts will leave them with less disposable income, which could make it much harder to get on the property ladder
  • A graduate laden with debt could also have a significant impact on their pension fund for later life
  • If you can afford to do so, it's up to you

No - I won't pay off my child's student debt

  • The majority of students will be in the same boat on graduation
  • If they have been sensible, they should not have any outstanding debts other than their student loan, which is easy to manage once they start their working life
  • Student loan repayments only kick in when they are earning more than £15,000 per year, and repayments are manageable and will come direct from their salary
  • It will teach them financial responsibility
  • And prevent them from racking up other expensive debts that are less worthwhile
  • They may be in debt now, but in the long term most graduates will earn more depending on their course

However, if you have grandchildren and want to help them through university, why not:

  • Consider opening a savings account for them and get them into the habit of saving money
  • You could even contribute small amounts into the account regularly each month
  • Contribute to their Child Trust Fund
  • Or give gifts - you can gift away up to £3,000 tax-free each tax year

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

 
 
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