In recent years, the cost of going to university has increased dramatically, which is why tuition fees in England and Wales cost more than £9,500 a year in 2025. This means a three year course could cost close to £30,000, which is not an insignificant amount of money.
As these fees are typically paid for with a student loan, the cost of going to university has the potential to affect your child’s finances both now and in the future. While university can, of course, prepare your child for their dream career, it may also mean that they start their career with tens of thousands of pounds worth of debt.
This is backed up by the BBC in August 2025, when it revealed that graduates who started paying back their loan in 2024/25 owed an average of £53,000. That said, student debt isn’t as straight forward as you might think, which means paying it off for your child or grandchild may not be the most financially savvy strategy. Read on to discover why.
Student loans are different to traditional loans
Student loans are very different to the types of loans offered by banks and building societies. One reason for this is that they are only repaid when your child’s income exceeds a certain threshold. In 2025, this is:
- £25,000 in England
- £28,470 in Wales
- £32,745 in Scotland
- £26,065 in Northern Ireland.
This means your child or grandchild will not start to repay their student loan until they earn over these amounts. It’s also worth remembering that they don’t start repaying the loan until the April after the course ends.
In addition to this, if the debt is not repaid within 40 years, it is cleared by the Government.
Typically, employers deduct student loan repayments from the employee’s salary
When your child earns more than the income threshold, their employer deducts the repayments from their salary. This is similar to the way employers pay Income Tax, National Insurance contributions or workplace pensions.
As the repayments are fixed at 9% of whatever your child earns over and above earning threshold, it could be said the repayments are more like an added tax than a loan.
With all this in mind, if you’re thinking about paying off your child or grandchild’s student loan, you may need to consider your options carefully. According to Government statistics, 44% of full-time undergraduates that started their studies in 2024/25 will not pay their loan off in full.
As such, if you were to settle your child or grandchild’s debt, you may pay back more than you need to. A better option might be, for example, to use the money to help them onto the property ladder, or even to set up their own business.
You could help your child or grandchild with the maintenance grant
Another way you could provide financial help to a younger member of the family who’s studying at university is to help with their living expenses. Doing this could significantly reduce the amount of debt they leave university with, which means they could settle the loan more quickly.
This is because student loans are split into tuition fees and maintenance grant. While the former are paid directly to the university, the latter is paid to the student to help them cover the cost of living.
As the maintenance grant is means-tested, it’s broadly based on how much a student’s household earns. This means that students from higher-income households will receive smaller loans.
If your child is studying in London, they are usually entitled to a larger maintenance loan because of the increased cost of living in the capital.
For the coming academic year (2025/26), the maximum loan students can receive is £10,544 a year, or £13,762 in London. The minimum loan available to students with parents with higher incomes, is £4,915 or £6,853 for those in London.
If your child is living at home while studying, their maintenance loan will be between £8,877 and £3,907, depending on how much you earn.
For students with divorced parents, the maintenance loan is calculated based on the household income of whoever they are financially dependent on. Usually, this is the one they live with and if this parent has a partner, the latter’s income will also be considered.
You may want to help with your child or grandchild’s living costs
Both the maintenance loan and tuition fees are combined when it comes to repaying the debt. As such, helping your child or grandchild with the cost of living may mean they do not need a maintenance loan, which in turn, could significantly reduce the amount they eventually owe.
This could provide peace of mind for both you and them that they will not be starting their career with substantial debt. If you have young children or grandchildren and would like to do this when they go to university, you may already be putting money aside to fund their studies.
If you are, our recent blog that looks at how you might be able to expose the money you put aside to greater growth potential.
Get in touch
As one of the UK’s largest independent financial advice companies, we can help you to meet your financial goals more quickly and with peace of mind. If you would like to support your child or grandchild through university, either now or further down the line, we’ll help you to understand your options.
Please call us on 0333 010 0008 if you would like to discuss how you might be able to create a fund for your child’s, or grandchild’s, education. We would be happy to arrange a no obligation initial meeting with one of our independent financial advisers.
2 September 2025