Parents underestimating real cost of university

As universities prepare to welcome a new batch of students for the start of the 2008/2009 academic year, parents across the UK estimate the total cost of sending their child into further education will be £12,550, according to new research from Birmingham Midshires.

That’s in stark contrast to new estimates from the National Union of Students which suggest that the average student graduating this year will be £20,000 in debt and the average cost of a three year course now surpasses £40,000.

Following the introduction of top-up fees for the 2006-2007 academic year and with the cost of living on the rise, the Birmingham Midshires research has thrown up some surprising insights into how parents are planning to deal with the cost of university.

Almost one third (31%) of parents believe their children should share the financial burden of going to university and therefore plan to encourage their offspring to work from the age of 16 and save. Almost two in five (39%) parents from the South of England agree that their child should work and save up to help share the cost of their university education.

Along the same lines, almost one quarter (23%) of parents intend to encourage their children to take out a student loan to help with their living costs. And 15 per cent are encouraging their kids to apply for scholarships to help offset costs.

Some parents however are choosing to remove the financial burden from the child altogether by taking a second job themselves. More than one in ten (11%) believe that they will be able to sufficiently support their child through university, provided they secure a second source of income.

Getting the best return on funds earmarked for education costs has also become more important, with 22 per cent of parents setting cash aside weekly in a high-interest savings account.

Tim Hague, head of savings and investments at Birmingham Midshires, commented: “Since the introduction of top-up fees, the cost of sending a child to university has become an even larger financial burden for parents just at a time when the general cost of living is also on the rise. As parents take some tough decisions to prepare for their financial future, it seems their children are increasingly being asked to help cover the cost of their further education.

“Getting the best possible rate on savings in the years and months before a child starts university will go a long way to help cushion the sudden jump in costs. At Birmingham Midshires we strive to help parents reach their financial goals by continuing to offer high rates on our savings accounts.”