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Parents underestimate university costs – report

Your Money
Written By:
Your Money
Posted:
Updated:
08/07/2013

Parents are underestimating just how much it will cost them to send their children to university, with many having to dig into savings to fund higher education.

According to a recent report by the Association of Investment Companies, the average debt for students starting at a UK university in 2012 is expected to be £53,000 on graduation, but students expect to leave with £24,436 in debt and parents’ estimates are further away still, at an average of £18,333.

So while parents expect to dig deep to help their children through university, they may have to dig further still.

The report found that 33% of parents expect to use some of their cash savings to help fund university costs, while a further 10% said they will use all or most of their cash savings.

Five per cent said they will sell their shares and investments, 4% of parents will take out a bank loan in their own name, and 3% of parents said they will downsize the family home.

And it’s not just parents having to dig deep, grandparents are also helping out. The report found that 14% of students’ grandparents are stepping in to help with an average of nearly £2,000 per year.

Both parents and grandparents said they are forking out more because of the tough economic climate.

Annabel Brodie-Smith of the AIC said: “Whilst it’s never going to be easy to build up the huge sums of money that a university education can now entail, a little forward planning could definitely remove a good deal of the burden.

“A small investment can be worthwhile over the long-term, with a £50 per month investment in the average investment company over 18 years to the end of June growing to £24,835 whilst a lump sum investment of £1,000 over the same time frame growing to £4,180.”

The tough economic conditions are also changing attitudes to living at home with parents and tuition fees.

Nearly half of parents expect their children to live at home while at university, with a fifth of students saying the same, because they want to save money.

While some 23% of parents would recommend that their child choose a lower charging university, only 6% of those expecting to go to university agree. Nearly 90% of those expecting to go to university say they won’t be influenced by the level of tuition fees.

Young people are also acutely aware of the difficulties of getting on the housing ladder, with nearly half of students would prioritise help with university costs, over a third (34%) said they would rather have help towards a first property.

Parents appear much more focussed on helping with university costs (60%), while only 23% would prefer to prioritise helping their child with their first property.