Would you delay retirement to help your children through university?

A third of parents are delaying their retirement – many by up to 10 years – in order to share the financial burden of putting their student children through university, according to a new study.

On average, parents are expecting to work five years longer than planned to cover the costs of their children continuing to study, the research found – but more than a quarter (27%) will have to postpone retirement by a decade to top up savings accounts and pensions spent instead on their kids’ education.

Rathbones commissioned independent research agency Viewsbank to interview 824 parents, including 173 who have had children at university in the past 10 years and 79 who currently have children at university in August 2025.

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According to the survey, on average, parents spend £7,200 a year supporting their children through university – money that otherwise could be accumulating in their pensions and investment funds.

But at the margins, the financial burden parents take on is even higher. One in seven (14%) are contributing £10,000 to £15,000 annually – and another 8% are spending more than £15,000 a year paying for their children’s higher education.

Over a standard three year degree course this could mean parents are missing out on as much as £45,000 that could have gone into their pensions – which, once investment growth is factored in, could amount to a loss in retirement funds of tens of thousands of pounds more.

Faye Church, senior financial planning director at Rathbones, said: “Supporting your children through higher education need not be the death knell for retirement dreams, though. With the right financial advice and planning, parents can help their children without sacrificing their own goals.”

Cost of university rising

The cost of higher education has become a serious financial planning concern for parents as fees and associated costs continue to rise.

Full-time undergraduate tuition fees will increase to £9,535 in 2025/26, up from £9,250 in 2024/25, according to Universities UK.

Student rents have risen 7.5% annually since 2021, analysis by Property Week found, with London students in particular facing an affordability crisis as rents exceed maintenance loans.

While students can get tuition fees and maintenance loans, in many cases these increased costs fall to parents to pick up. Around a fifth (22%) of parents pay all their child’s costs, including tuition, accommodation and living expenses, while 27% fund accommodation and living costs.

Bank of Mum and Dad overdrawn

The financial burden of putting children through higher education extends beyond the formal years of studying and often well passed graduation.

More than half (55%) of parents said they were still supporting children after university. Fewer than a third (31%) of parents say their children are or will be financially independent after they’ve graduated.

The increasing strain on the Bank of Mum and Dad is clear. Three quarters (73%) said funding their children through university has negatively impacted their finances, with some parents getting into debt to support their children’s studies.

Nearly two-thirds (63%) of parents have cashed in savings like easy access accounts to cover the cost, while 29% have sold investments. Others have reduced pension contributions (17%), borrowed on credit cards (17%), remortgaged (13%) or downsized their homes (4%).

“It’s not just the three or four years of university costs that parents need to plan for anymore but what happens after graduation,” said Church.

“The Bank of Mum and Dad is now supporting adult children for longer, which is having significant financial consequences, both in the immediate and in the long term. Sadly, this issue shows no sign of abating as the path from university to financial stability appears more and more uncertain,” she added.

Graduate reliance on the Bank of Mum and Dad is compounded by a tougher jobs market.

By age 31, graduates earn an average annual salary of £30,751 – a third more than non-graduates (£22,482). However, graduates also face loan repayments once earning above £25,000 under the Plan 5 scheme. Government data estimates the average 2024 graduate will leave university with debts of £53,000.

In addition, the proportion of graduates in full-time employment 15 months after completing their studies fell from 61% in 2021/22 to 59% in 2022/23, according to Universities UK.

How to pay for your child's university cost

The fact that this financial investment is likely to pay off over the years doesn’t help right now. In the case of tuition fees and a portion of maintenance costs, this can be covered by loans, so the graduate can deal with the cost later. Plenty of students will also work alongside their studies in order to cover some of their living costs.

However, many parents will still need to step in and cover the rest of their living costs. To make matters worse, the maintenance loan has fallen way behind rising prices. Students are getting poorer with each passing month, which threatens to take a toll on their studies. Families may need to help get them through an increasingly difficult part of life.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “If you’re already contributing whatever you can, and you haven’t already spoken to the wider family about this, it might be worth considering having a conversation.”

Coles gives her top tips on easing the financial burden of putting children through university:

Grandparents giving gifts

If grandparents had planned to give gifts later in life, they might be able to accelerate the process and help at a time when it can make a major difference. If they are concerned about a potential inheritance tax bill, this could work in their favour too.

“If they chose to give regular gifts from their income, this would fall outside their estate immediately for inheritance tax purposes,” Coles pointed out, allowing their loved ones to avoid inheritance tax.

Junior ISA

Anyone who thinks there’s a chance their child might go to university at some point in the future should consider the finances as early as possible. One popular home for any savings or investments for children is the Junior ISA.

It allows you to put aside up to £9,000 a year and it will grow tax free until they can access it at 18. By tying this money up, you can ensure they don’t dip into it earlier in their childhood, and still have what they need when they get to university age.

“The earlier you start saving or investing, the better. If this seems like a stretch at expensive times in their childhood – including the early years – you can ask grandparents if they can step in while finances are tight, to give their grandchildren a real head start in their adult life,” Coles said.

You don’t have to start with huge sums of cash. You can put in £25 a month, and get on the right track without breaking the bank.

You can choose to save this money or invest through a stocks and shares JISA, but investing is usually a more sensible option for the long term, and during 18 years of a JISA there’s usually plenty of time to ride out the short-term volatility of the stock market and take advantage of long term growth.