Parents may need to contribute as much as £14,000 a year to help their children with university living costs. That’s according to a new report from the Higher Education Policy Institute (HEPI) and TechnologyOne.
Under the current UK education system, parents are expected to provide financial support for their children at university. The report found that in order to do this it could cost parents as much as £13,865 in England (£6,482 for Welsh students, £10,232 for Scottish students, and for a Northern Irish student, it is £13,548). This estimate is based on the cost of a “minimum basket of goods and services” and assumes that the student gets a minimum maintenance grant for their living costs.
With inflation, rising mortgage rates, energy bills and soaring private school fees putting pressure on households, parents have to shoulder the added burden of providing for their children’s university costs.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Meanwhile, for students, the challenges are mounting, balancing higher education with a social life, while managing bills and working part-time adds another layer of difficulty.
We look at what challenges parents are facing to provide their children with good quality education despite the hefty price tag.
Burden of university living costs
According to the HEPI report, students in private rented accommodations need an average of £366 a week for a decent standard of living. Annual costs are estimated at £21,774 for students based in London, and£18,632 outside the capital.
Currently, the government maintenance allowance only provides students with up to 65% cost coverage – leaving a gap of at least 35% of the costs. As a result students may have to find work to cover their living costs or seek handouts from their parents.
But to cover those living costs students would need to work between 14-23 hours, which is much higher than most universities recommend – a maximum of 15 hours per week during term time.
We’ve looked at how much parents may have to contribute to their children’s university living costs and the number of hours a student may have to work in paid employment, at minimum wage, to make ends meet without parental support.
| Location | University living costs | Maintenance loan cover | Parental contributions | Expected weekly working hours for a decent standard of living |
|---|---|---|---|---|
| England (outside London) | £8,405 | 55% | £13,865 | 19 hours |
| Wales | £6,482 | 65% | £6,482 | 14 hours |
| Scotland | £7,232 | 61% | £10,232 | 16 hours |
| Northern Ireland | £10,496 | 44% | £13,548 | 23 hours |
Josh Freeman, policy manager at HEPI who authored the research, revealed to MoneyWeek how these obstacles hurt parents the most. He said, “It is very challenging for families [...] – with students in England who get the minimum maintenance support, for example, nearly £14,000 short.
“All of this is made worse because the government never tells parents how much they need to contribute. We’ve heard from students and parents that this can cause friction. The government should raise the level of maintenance support, raise the threshold for parental contributions and be honest to parents about how much they should give, so all students can reasonably meet their costs while studying.”
Ways to invest in your children’s future
If you don’t want your child to enter the professional world with mounts of debt, you’ll need to start saving early to cover college costs.
- Consider setting up a junior ISA, which is a tax-efficient way of saving for your child. You can stash away up to £9,000 a year and shield your gains from the taxman.
- Look at child bank accounts. It’s a way of boosting your child’s financial knowledge from an early age. Plus, it will let your kid use their personal allowance of £12,570 and they also qualify for another £5,000 in savings before having to pay any tax.
- Another way of getting a headstart on your child’s future is by paying into a child’s pension or set up a stocks and shares ISA to save money while paying less tax.
And if you want to make your money work harder for you, in general, head to our best savings accounts guide and best cash ISAs guide to find the best rates for your cash.
-
Revolut finally bags a UK banking licence – what next for the challenger?Revolut has finally been granted a UK banking licence following three years of negotiations with the regulator
-
Could Labour impose a “double death tax” of more than 50%?Speculation is mounting that capital gains tax will be reformed in the Budget - and one option is to charge bereaved families the tax on top of inheritance tax. We explain how it could work
