Parents, do you really know how much uni debt your kids will amass?
Last year, the average graduate from an English university left with around £44,000 of debt, but parents expect the figure is closer to £23,000.
Students are closer to the mark, predicting an average debt of £35,000 but they are underestimating the time it will take to pay off their debt. The average student expects to take 17 years to pay it off once they’ve graduated, but research from the Sutton Trust suggests three in four graduates will be paying off student debts into their 50s.
While a substantial number of parents – 61% – seem willing to help with the financial costs of university, rising to 73% for Londoners and a low of 47% in the South West, a significant proportion – 78% – of these will be relying on their own cash savings, the study by the Association of Investment Companies(AIC) found.
Some 9% said they’d consider taking out a loan and around 8% said they’d sell their shares or financial investments to help out their kids.
In 20% of cases, grandparents are contributing to children’s university costs to the tune of £2,400 on average a year.
Parents make financial sacrifices
Annabel Brodie-Smith, communications director, at the AIC said: “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.
“It’s worth parents planning ahead, if they can regularly save some money for the long-term in an investment company saving scheme. Parents think they need large sums of money to do this, but investment company saving schemes start from as little as £25 a month.”