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Parents underestimating university costs

Parents underestimating university costs

Category: Money

Updated: 14/12/2012
First Published: 18/08/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Many parents are making an effort to set aside money for their children's university education, but more than half underestimate the cost that comes with further study.

From 2012, universities will be able to charge up to £9,000 per year for their courses, while other debts will be accumulated from the costs of living expenses, student loans and other kinds of borrowing.

Standard Life predicts that students could rack up debts of up to £54,000 during their undergraduate learning, but it seems parents are not prepared for such a large figure.

In fact, six in ten parents think the maximum amount of debt their offspring could leave university with is £40,000.

"The findings of our research are positive as they show that parents have identified the need to save for their children's time at university," said Julie Hutchison, head of technical insight at Standard Life

"Unfortunately their expectations of what that cost could be and therefore the target amount they want to save might actually be too low."

With the cost of further education set to soar, parents have taken the step to building a tidy nest egg for their children to take away with them.

A fifth (21%) of parents have started to make regular savings to help ease the costs of their children's university education, while nearly a quarter (23%) of parents are putting money aside on special occasions like birthdays or one-off windfalls.

Just over half of parents in the UK who save on a regular basis are saving less than £50 a month towards their child's university costs, 27% are saving £50 - £100, 7% are saving £101 - £200 and 4% are managing to squirrel away more than £200 every month.

There are many parents who are not in the financial position to put money aside for their children's university education, with 56% saying it is beyond them.

"Attending university is of course a worthwhile pursuit but can be expensive with the costs of tuition fees, living costs and course material all adding up over the years," added Ms Hutchison.

Even though a student loan can be taken to cover all these outgoings, parents can also seriously help reduce these costs.

"Parents will need to decide when they want to gift the money to their child, as this will determine which savings method they should use.

"Do they give them the entire fund before they go to university, make partial withdrawals to help cover certain costs such as accommodation fees, or keep the money invested and help them clear their debt following graduation?"

One of the most important student finance decisions that people make is which bank account to choose.

There is a huge selection to choose from, many of which offer incentives such as money off books or cut price travel – ideal for those studying a long way from home.

Some offer interest free overdrafts as part of the package, which might suit those who think they may be stretched financially when they are at university.

Find the best bank account for you - compare bank accounts

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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