Today, according to the Student Loans Company more than 2.6 million people owe more than £50,000 in student debt. So, how is this impacting these individuals?

A graduate in their early thirties with a decent job, living in rented accommodation,  paying the minimum student loan repayments, barely shifts the needle on their loan balance. Thus a single education decision made at eighteen, can cast a long financial shadow across a working life – with debt accumulating and shaping other choices such as saving, home‑buying, and even starting a family. 

These are the concerns behind the questions our clients bring us: Should we pay university fees for our children or grandchildren? And how will that choice shape their future — and ours?

It sounds like a practical question about avoiding debt, but in truth, it’s a deeper one: Is a student loan really a debt in the way a credit card bill is a debt, or is it closer to a graduate tax spread across a career?

For many people, these repayments behave far more like a tax: income‑linked, fluctuating with earnings, and often written off after a set period (UK student loans typically expire after 30 or 40 years). Once you see it this way, the whole picture shifts. Planning university is no longer about eliminating a balance — it becomes a question of how a family spreads its resources across time, across generations and across competing demands.

The strongest decisions come from understanding these dynamics clearly, not from assuming that avoiding a loan is always the best gift.

What Clients Are Asking

The questions carry deep emotions: 

• Should we pay for university or let them take loans?
• What is a fair way to support grandchildren?
• Will paying fees delay when we can retire?
• How do we give tax efficiently?
• How do we balance their education with our own retirement planning?
• If we fund university, do we remove a valuable learning experience?
• If we do not, will our child feel unsupported 

Behind each question is a family trying to guess the future: parents worry one child will struggle more than another, grandparents worry about fairness. There is fear of getting it wrong in a way that cannot be fixed. Choices about education become moral tests.

Why a Student Loan Can Make Sense

In some situations, the loan is not the villain:

• If income stays near the repayment threshold, the long-term cost can be limited 
• Paying fees upfront can mean giving up growth from your capital that might matter more later 
• Re-paying loans in full ties capital to an uncertain outcome 
• Loans can build independence and responsibility 
• Instead of paying University fees or clearing loans, some families plan to support later with housing or other help 

The mistake is to treat loans as bad and paying fees with cash as good. Each option trades one set of risks for another. 

Why a Student Loan May Not Make Sense

However, a student loan, if not strictly necessary for you, has some drawbacks to consider: 

• It’s an additional ‘graduate tax’ once earnings are above the threshold, limiting regular take-home income – potentially for a large proportion of working-life 
• If you pay a lump sum contribution, the amount deducted from pay every month will still be the same, until it’s fully cleared 
• It could limit the size of a mortgage, or any other future borrowing 
• This could potentially impact ‘settling down’ decisions 
• Higher earners could clear the debt earlier, but must pay higher levels of interest, since the interest is charged on a sliding scale with higher rates payable for higher earnings

How University Education Decisions Sit Within a Life

Peak earning years often collide with the University fee decisions. This creates a financial pinch point that can shape how well you can save, invest, and plan for later life. The timing is rarely easy. 

Every family arrives at this conversation from a different direction – but the theme is consistent: How do we use the time, money and energy we have in a way that supports everyone, not just one generation?  

Money directed to university fees can’t be used elsewhere. And the time spent earning to cover these fees is time not spent on other parts of life that matter too. Understanding that trade‑off is where clearer decisions begin. 

The Citywide Perspective

We treat education choices as life choices. The first question we like to explore isn’t about fees as such – it’s about purpose. 

What are you trying to buy? Is it….

• Academic stretch?
• Confidence or belonging?
• Access to a particular world?

Once that’s understood, the funding question can settle into the wider plan. University costs don’t stand alone; they sit within a broader financial picture, where opportunities for children or grandchildren must support – not undermine – long‑term security or the life you want to live. 

Strong decisions come from seeing the trade‑offs clearly, not from reacting to what ‘good parents’ or ‘generous grandparents’ are expected to do. 

How We Help Families Think Clearly

We make tradeoffs visible. Our cashflow modelling shows how today’s choices around university fees pull on tomorrow’s retirement date and lifestyle.  

When people can see the shape of the decision, the conversation has more meaning. We can’t ever predict the future, but this kind of visibility helps to provide a sense of solidity and structure to the decision-making process.  

Conclusion

University funding, and the wider topic of education costs in general, sit where love, money, values, and time collide. The numbers might be visible, but the trade-offs usually aren’t. The emotional weight feels heavy for many of our clients.  

The most expensive option is not always the best.
The most generous option is not always about giving.
The most supportive option is often the one that preserves wellbeing and financial resilience. 

In next month’s article we explore a number of different scenarios to illustrate the cost of university education and the choices available to parents and grandparents. Sign up to the newsletter in the footer, if you haven’t already, to make sure you don’t miss it. 

We hope this is a conversation worth having.