Today’s job market is becoming increasingly competitive and anything you can do to give yourself the edge over the other applicants might make the difference between a successful job interview and another rejection letter. Because of this, the more qualifications you have the better. Many employers use further education as a way of helping them to sift through hundreds of job applications: an applicant with a degree is more likely to secure an interview than an applicant without one. But with further education becoming more expensive with each year that passes, you may have to help your kids fund their way through three or more years of college or university.
The Cost of Further Education
Tuition fees vary between different universities, but on average, most three or four-year degree courses cost around £30k. However, this figure is very misleading because on top of the cost of tuition fees, students also need to factor in the cost of living during their time at university. What’s more, there is another hidden cost: interest charges on the loan.
What is the Repayment Threshold for Student Loans?
Tuition fees and maintenance loans have to be paid back once the student is earning more than £21k per year, although this may change in the future. 9% of any salary above £21k is deducted as a repayment towards the loan, so the more the student earns, the faster the loan is repaid.
What happens if My Child ends up in a Low Paid Job?
Those who pay off their loans early will pay less interest, so anyone studying to become a high earning lawyer or accountant will end up paying less over the lifetime of the debt. Unfortunately the opposite is true for anyone who ends up in a less lucrative career, since it will take them longer to pay off the debt and therefore the interest charges will be far higher. Because of this, it has been estimated that some students in low paid jobs could end up repaying more than £100k over their lifetime, which is a high price to pay for a university education.
How Can I Help My Child Fund their Education?
As a parent, it is only natural to want your child to do well in life. We to be the best they can be and in many cases, a university education is the best way of ensuring that more doors are opened to them in later life. With this in mind, it is very understandable that a lot of parents wish to help their kids out financially, either by giving them a bit extra as and when they can afford it, or if they have the money available, paying their fees up front.
Cash In On the Equity in Your Home
One way of raising some extra cash to help your struggling offspring through university is to take out a secured loan. By the time we reach middle age, thanks to a favourable property market, many of us have built up a significant amount of equity in our homes. Tapping into this resource is a good way of releasing capital, and this can be used to help your kids fund their way through university.
How Does a Secured Loan Work?
In most cases a secured loan is tied to a fixed asset, usually a property, so if the borrower fails to make the repayments, the lender can take possession of the asset in order to recover their loss. Secured loans are not suitable for everyone, but it they are a good way of borrowing a large amount of money at a low interest rate if you have equity in your home.