When it comes to funding a university education, it is parents and grandparents that typically look to provide the money. But even though this may be the case, last year’s graduates from English universities still left with an average of £44,000 debt (source: Sutton Trust), with some parents still, on average, expecting their children to leave university with £23,000 debt.
Students are closer to the mark, predicting an average debt of £35,000. Students expect, on average, to take 17 years to pay off their debt once graduated; research from the Sutton Trust suggests three in four graduates will be paying off student debts into their 50s.
Parents overestimate amount needed for regular saving in stock market
Most parents look to cash savings to fund their children’s university costs, and there is a perception that quite large sums of money are required to invest in the stock market. Parents estimated, on average, that the minimum amount required to invest monthly in an investment saving scheme was £81.51 per month, when in fact the minimum amount required to invest in a children’s investment company savings scheme is much less, namely £25.
The research suggests that many parents massively underestimate the amount of student debt their children will graduate with. Parents are willing to make huge financial sacrifices to help their children through university, and many grandparents are sharing the financial burden.
Bank of Grandma and Granddad
A fifth of grandparents are contributing or planning to contribute to children’s university costs, to the tune of £2,402 on average per year. A quarter are already contributing financially to everyday family expenses.
An education or a first home?
Interestingly, one third of students said that they had a savings and investment scheme which their families had ‘earmarked’ for their future. Half of these wanted the money to go towards their first property, 44% wanted to spend it on university costs and a free spirited 16% wanted to spend the money on travelling.
Want to assess the options available to you?
Current university students may face leaving with massive debts as well as a degree, but parents can act now to ease the financial burden. Don’t to be afraid to seek professional advice.
The research was conducted by Opinium from 8–16 June 2016 amongst 1,006 UK parents with children aged 13–18 that are planning to go to, or are already at, university, and 1,014 UK full-time students planning on going or currently at university.
INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.
THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.
PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.