Parents willing to pay child’s university costs should save early
Parents planning to pay for their child’s university education, whether whole or in-part, must start saving as soon as possible, financial services provider Wesleyan has warned.
According to research by the firm, parents are willing to pay off 67 per cent of their child’s student debt.
The Institute of Fiscal Studies calculates today’s students graduate owing on average £40,500.
If Wesleyan’s findings are accurate, parents will have to contribute £27,135 towards their child’s university education. As a result, the firm is urging parents to start saving as early as possible, to ensure this ambition can be met.
The financial services company has calculated that parents could cover this anticipated contribution to university costs if they save £82 every month from their child’s birth until graduation.
However, if they defer saving until their child starts primary school (aged five), they will need to save £115 a month. Should they wait until their child begins secondary school (aged 11), they will need to save £199 a month – and if they delay until their child has taken their GCSEs, parents will need to save £424 monthly.
Alan Whiting, Wesleyan Group head of marketing, said: “Higher education costs have soared in recent years and show no sign of easing, with maintenance grants being replaced with loans and some universities being allowed to increase tuition fees from 2017.
“With more graduates facing large debts when they finish their education, it is understandable parents will want to help where they can, even if they don’t intend to cover all the costs. The message for them is clear – the earlier you start saving, the more affordable it will be.
“Parents should ensure they have the right long term savings plans in place and make the most of tax efficient savings products, and in particular utilise their full ISA allowance.”
He added: “As our research shows, many parents are prepared to pay for some, but not all, university costs, which will still leave their children with debt. With this in mind, parents might also want to instil good financial habits in their children from a young age to help them cope with their student debt and ongoing money matters once they’ve graduated.”