How to fund a university education

With university fees increasing enormously from September, how do you spare your child from years of back-breaking debt? Tim Bennett examines the options.

The cost of going to university is rocketing. From September, students in England will face paying average annual tuition fees of £8,385, says Alexandra Goss in The Sunday Times. Three-quarters of universities are levying the maximum £9,000 for at least one course, while a third will charge it for all degrees, according to the Office for Fair Access. That's well over twice the average paid in 2011-2012. Taking living costs into account, this year's average student could graduate with £53,400 in debt. So what's the best way to pay for all this?

Most students won't be able to just write a cheque, so many will be forced to take out a student loan instead. But watch out. Financial adviser Hargreaves Lansdown has looked at the interest payable on a student loan, based on borrowing the £9,000 of tuition fees every year, plus £5,000 of maintenance costs. If a student lands a £40,000 a year job, they'll end up paying back £133,240 over 29 years, including interest of £89,750 (this assumes average inflation of 3% a year plus salary growth of 2% above the retail price index). So what can nervous parents do?

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.