If anyone thought that the bank of Mum and Dad would close its doors once the children had left for university, a new study from Nationwide Flex Student shows otherwise. Indeed, the bank remains very much open for business, with some students being particularly bold with their requests.
Footing the bill
While many parents want to help their children cover the cost of things like accommodation and food, others will go even further. In fact, a third of students said they'd rather ask their parents for money than forego a night out, while 67% said they'd used their student loan to splash out on such frivolities. A further 66% had used it to go shopping while 30% used it for holidays, and 8% even used it for a car.
Much of this could be down to a sheer lack of money management skills, with 69% of students surveyed saying that they were taught insufficiently about finance and were ill-prepared for student life, with 30% saying they taught themselves everything they know about how to manage money.
This inability to budget could explain why many are so frivolous with their spending, and considering that 29% of respondents said they'd spent their whole loan within a few months of receiving it – and 11% said it was gone in the first month – it's little wonder that the bank of Mum and Dad is so regularly called upon.
However, this could be taking its toll: 68% of parents said they make up the shortfall themselves, and as a result, many have had to cut back their own standard of living. This has had a huge impact on their lifestyles, with savings (34%), holidays (29%) and even socialising (25%) all affected. Many have had to forego things like a new car (22%) and other fun expenditures (22%), just to pay for their children to go to university.
Some have even had to take more extreme measures: 15% said they've had to borrow money or get in to debt, and 14% have taken a second job or delayed early retirement. Given that parents estimate the bill for university to be around £2,500 per year – totalling £7,500 for a three-year course – it's perhaps not surprising that many feel the need to cut back on essentials.
Dan King, Nationwide's head of FlexStudent Current Account, commented on the findings: "University can be an extremely expensive time for parents and students alike, and often parents are expected to cover the shortfall, putting them under increased pressure and resulting in tightening of their purse strings. For students to manage their own financial situation effectively, they need to understand how finances work and learn to budget, so they can stand on their own two feet."
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