Five Common Parent Questions About Helping Your Children with Student Finance at University by University Compare

Monday, 29 January 2018
Letting your kids go to university for the first time is always a difficult thing to have to come to terms with. Watching them finally fly the nest and have their first forays into financial independence is something that can be tough to deal with.

Plenty of parents are worried about their children going to university and want to know a little bit more about the financial side of things before allowing them to head off on their own. We’ve compiled five common questions that parents often ask when trying to help their children with finance at university.

What do I need to provide to help with the finance application?
Circumstances are everything. This will all depend on your income and the number of children or dependents that you have. The university in question will ask you to provide details of people in your house on any forms that you have to fill out.

You'll need to provide proof of earnings - a P60 would do fine - and your National Insurance number. If you or anyone in your family claims taxable state benefits or pensions or income from investments (Foreign or UK-based), you will need to provide proof of these too.

If I am a divorced parent, does this affect the application process at all?
It can do, but it depends on your current situation and income. Children will need to provide the financial information of the parent or dependent that they live with on a regular basis.

It will also depend on the circumstances that the child is in as well. If your child is in a civil partnership, married or living with their partner, then they will need to provide their financial information too.

What if I have more than one child at university?
This can affect the amount of money that each child will receive as a result but also depends on the country they're studying in. For instance, in England, Student Finance England will deduct a whopping £1,130 from the total household income.

Here’s an example.

If a household has an income of £58,000 with two children currently attending university, you will be considered to have a household income of £56,870. The reason this is significant is because the resultant household income may push you into a lower income bracket, which means that your child could receive a bigger Maintenance Loan.

Your geographical location will be taken into account, too. Many children move away to other areas of the country, and still have the location they live in used as a barometer for allowances. As a result, many students look at an interactive university map before making a decision on where to study.

Should I help my children repay their student loans earlier, or should I wait?
This is really up to you. As you'll be aware, all loans accrue interest over time until they’re paid off. So the loan will start gaining interest relative to the amount your child is earning.

Our advice is not to pay the loan back earlier than you need to, and there are several reasons why.

First of all, the loans have a 25-year period to be paid back in. This means that any loans that are not paid back within that time are automatically written off and are not required to be paid back at all. While this may seem unlikely, this is how the student loans in the UK work.

Secondly, with the previous suggestion in mind, you'd have to ask yourself: why would you want to? Since the interest on the loan will be changing constantly, you may end up paying back way more than you need to, so it’s best to just pay it back as you go along.

Will my child’s loan affect their credit rating?
A student loan does not affect your credit rating or your child’s. It will, however, need to be declared when applying for any major finance proposals or mortgages.

With regards to mortgages, when your child applies for one, they will have their loan repayments taken into consideration as a way of calculating their net income and seeing the viability of the candidate.

Students are always worried about their student finance and plenty like to find out about their financial futures with their parents,. The same is true for when they are looking to compare universities, so we hope that these five frequently asked questions have helped.

Remember to check with the university that your child will be attending to see if they have any individual stances that you need to consider as well.

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