University debt headache for parents
When asked to take into account the increase in fees to up to £9,000 a year from 2012, and any other debts accumulated from living expenses, student loans, bank loans etc, 58% of parents think the maximum debt their children could leave with is £40,000 or under. Many think this would be a lot less.
However, this total is well under the maximum figure of £54,0001 calculated by the long-term savings and investment firm Standard Life.
On a more positive note, a fifth of parents have started to make regular savings to help ease the costs of their children's university education. And nearly a quarter of parents are putting money aside on special occasions, e.g. birthdays or one-off windfalls. But Standard Life warns that many are probably not saving enough.
Julie Hutchison, head of technical insight at Standard Life, said: "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. 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."
More than half of parents with children aged 0 to 9 are putting money aside for their child's university costs. Conversely, seven out of ten parents with children aged 14 to 17 aren't doing the same.
More than half of those 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% of parents are saving more than £200. Out of the 56% of parents who are not saving for their children's university costs, almost two-thirds say they can't afford to at the moment, while one in ten have just not considered it.
Hutchison added: "Parents can possibly identify where they can utilising a pre-existing payment that's coming to an end - this could be nursery fees, or a loan or credit card repayments. If they can continue to save this same amount it will allow them to make a saving towards their children's university debt, without impacting their own disposable income.
"If parents invest their money in the right tax-efficient savings product, such as an ISA or offshore bond and they can make their savings go a lot further. The tax benefits combined with the efficiency of compound interest could help grow their savings considerably and could make a significant difference to them achieving their financial goals and objectives."
Help could also come from grandparents. One in ten are saving for their grandchildren's university education on a regular basis, 16% occasionally and 2% as a one-off lump sum. Of those not saving, a quarter have just not considered it, with 15% counting on the child's parents to save enough money.
Regionally, parents in the Midlands are saving the most with 52% putting money aside for their children's university costs. London (48%) is next, followed by Scotland (44%), southern England and east England (both 42%) while the north of England is saving the least (39%).