Teenagers saving to avoid student debt

Many youngsters are saving towards higher education from the age of 11 because they have seen older family members flounder under the burden of university debts, according to research from leading Child Trust Fund provider, The Children’s Mutual.

And with news that 42 per cent of this year’s undergraduates plan to work part-time in a bid to afford higher education and 78 per cent of parents saying they think that the credit crunch will make it harder for them to fund their children through university, The Children’s Mutual is urging the nation to change the way it thinks about funding higher education.

A reversal of the traditional parent-child roles uncovered by The Children’s Mutual reveals that many young people show a better awareness of the need for financial planning than their parents. While nearly a third of youngsters aged 11 to 18 are putting money aside for higher education, a third of parents realised they are not saving enough for their children’s futures.

David White, Chief Executive of The Children’s Mutual said: “It is great to see that today’s teenagers are aware of the costs involved with going to university and are taking steps independently to try and avoid the high levels of debt that are now common amongst graduates. But the average cost of three years at university now sits at £40,400 - a huge amount of money for any teenager to find.”

Currently four times more teenagers are heading to university than 30 years ago, but according to The Children’s Mutual, many young people and their families are only just starting to realise the financial implications of their higher education aspirations. The average graduate leaves university with a £17,500 debt and according to the report, “little hope of paying it off”.

The report also uncovers that unlike their younger siblings who are saving for the future, many over 18s hadn’t thought it necessary to save for university and think that student debt is “normal” and that “a ‘culture of debt’ (is) accepted as a normal part of life.” This is despite the consensus among these young adults being that “having such large debts from student loans made it easier to fall into further debt.”