I should disclose a very personal interest in the thorny issue of student debt. The first of my three children started university in 2012, the first year in which tuition fees rose to a maximum of £9,000 a year.

Add in living costs and the price tag on a university education is now more than £40,000 in total.

The big question that I and many thousands of other parents face now is how this should be paid. Up-front by me or over the next 30 years by my children?

I have been amazed by the strength of feeling this has aroused – we have gone down the student loan route and for many of my friends and acquaintances I might just as well have admitted to giving my kids a regular thrashing.

The reality is that student finance is extremely complex and knowing what to do involves a number of judgements about your children’s likely future life choices and earning power, all of which of course are pretty much un-knowable.

First the facts. Students who take a loan for their tuition and living costs will start to pay it back once they begin earning more than £21,000 a year. They will pay it back at a fixed rate of 9 per cent of any earnings above that figure. And they will continue doing so until they have paid the loan and accrued interest back or until 30 years has passed, whichever comes sooner.

The interest they pay on their loan is linked to inflation, up to 3% more depending on your earnings level, and it starts accruing while they are still at university. This is a much tougher regime than the current system in terms of the level of interest and when it starts accruing, although the earnings trigger for repayments is higher.

Much of the debate about student loans relates to fairness. My view is that it is reasonable for students to repay the cost of their education because it is very likely to result in them having a significantly greater earnings capacity than if they didn’t go to university.

What I think is unfair is the way in which the Government has presented the financing of further education as a loan because in reality it is nothing more than a thinly-disguised graduate tax.

The reason I say this is that the interest rate has been set at such a high level (inflation plus 3 per cent) and the initial payments set so low for most 20-somethings (because in the early years they won’t earn enough) that anyone other than investment bankers and lawyers are extremely unlikely to actually pay off their loans within 30 years.

In the first few years the amount they owe will continue to rise because their 9 per cent repayments won’t even cover the interest accruing.

Indeed, a study out this week from the Institute for Fiscal Studies believes that around three quarters of graduates will have at least some of their loan written off by the Government. In effect they will pay an extra 9 per cent a year of tax on any income above £21,000 until they are in their early 50s.

So, as a parent, the question might actually be re-framed as this: should I pay now to save my children from paying a higher rate of tax during most of their working life? Depending on your personal circumstances and your attitude to personal responsibility, the answer to this may be yes. But if you asked most people whether they would shell out £45,000 over the next three years to help their children avoid becoming a 40 per cent tax payer later in life, they would most likely say no, I suspect.

An interesting side question is whether the Government has simply got its sums wrong. With around 45 per cent of student debt likely to be written off, the Government is perilously close to the point where it has actually made the taxpayer worse off by raising student fees.

The problem for me is the interest rate it is charging. If it had pitched the interest accrual at inflation rather than inflation plus 3 per cent the repayment arithmetic would look very different and the system might be a bit more like the loan scheme it pretends to be than a back-door tax hike.

Another question parents must ask themselves (and this is tricky ground from a gender politics point of view) is whether they think their daughters in particular are likely to work for 30 years or, like my wife, work for a few and then decide that the best job she could do was to bring up a family.

If her parents had paid £45,000 up front it would have been an extremely bad investment because she has not earned enough to pay anything at all back since my daughter was born. Under the current system, her debts which by now would have grown with interest to an eye-watering amount, would be on the point of being written off.

So, there are no simple answers to the dilemma of how to fund university. Ultimately it will come down to a personal choice and a decision based on crystal-ball gazing.

The good news is that if you do decide you want to pay the fees yourself, there is a very handy tax-efficient mechanism for doing so. The Junior ISA’s annual allowance rises to £4,000 a year in July, which, compounded up over 18 years, is more than likely to cover the cost of university and then some.

Tom Stevenson is investment director at Fidelity Personal Investing