Parents in Britain are feeling the financial strain of sending their children to university. Nearly 3 in 10 parents (29%) whose children have been to university say they had to sacrifice other major purchases in order to save or support them, and a further 23% say it has not been easy to fund their children’s education but they didn’t make sacrifices.
The recent rise in tuition fees and abolition of grants has put an even higher price tag on a university education and increased the need for parents to put money aside for their children’s future.
For those with children under 18, when asked to select their three most important saving priorities, sending their children to university (39%) ranked higher than saving for a home (30%), and trumps spending on hobbies (11%) and cars (17%).
Following the rise in tuition fees in 2012, over three-quarters (77%) of parents think that university is expensive, but 45% would encourage people they know to go anyway. A further 17% feel you can’t put a cost on education. Only 5% would discourage their children from aspiring to university because of the associated high costs.
These findings contradict a recent report by the Intergenerational Foundation (IF) which questioned political assertions that having a degree leads to higher earning. According to the IF report, paying off huge and relatively unregulated debts will wipe out any graduate premium in all but the highest-paid professions.
With the continued importance placed on a university education, saving to send children to university is a top priority for parents and often means that other dream purchases, such as expensive jewellery or electronics, have to take the backseat.
Alongside tuition and maintenance fees, the bulk of university costs are on accommodation, with the average cost of university halls coming in at £4,500 a year. Due to youth and inexperience, many students don’t budget when it comes to managing their money, with the ‘Bank of Mum and Dad’ providing a larger proportion of the average student’s income than term-time work and holiday work combined.
Many students are also questioning whether to apply for a student loan after it emerged earlier this year that many graduates are seeing their debts rise by as much as £180 a month because of the high interest rates from their tuition and maintenance loans.
Commenting on the findings, Gerald Grimes, Managing Director of Hitachi Capital Consumer Finance, said:
“It’s important to plan well ahead of your child heading off to university to understand what the real costs are likely to be, taking into account everything from rent to food to travel. As every parent and student knows, the costs of higher education can escalate far beyond tuition and maintenance fees. There are great tools and ‘budget calculators’ provided by organisations like UCAS and the NUS.
"It is critical for parents to let their children be independent and learn the hard way about the importance of budgeting. Knowing how to allocate money across the year and be self-sufficient is a valuable lesson for later life. Given last week’s cut in interest rates to a record low of 0.25%, parents should consider alternative loans as an option to help ease the financial strain.”