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£25 billion bill for 2009 university starters

20th August 2009 Print
The cost of university for this year's recent A-level graduates could be as high as £25 billion - almost £3 billion more than last year - according to leading Child Trust Fund provider.

The Children's Mutual. It warns that thousands of young adults celebrating their A-Level results and their parents may remain unaware of this rising bill.

The average student needs to find about £42,000 to fund three years at university, but this doesn't take into account the costs of any further training they might want to do after their degree. Currently nearly nine in 10 (87 per cent) of young people in the UK are receiving financial help from their parents and help towards university costs is something many students expect and parents expect to give. Increases in year-on-year university costs also mean this bill will rise in future years. The Children's Mutual is today urging families of young children to plan how they will cope with the money needed for university in the year's to come.

One way parents of future scholars can help mitigate the rising costs is by saving regularly from when their children are very small. The Child Trust Fund (CTF) was created by the Government to provide every eligible child with a nest egg when they turn 18, with parents, friends and family all encouraged to help save. Launched in 2002, more than 4.4 million children now have a CTF account - one third of the UK's children. Topping up a child's CTF on a monthly basis could result in a significant lump sum when the child turns 18, perfect for helping with university costs. It also means that parents might not have to face difficult financial decisions when trying to help their children, whilst contemplating their own financial futures. Families who manage to save the maximum £1,200 each year could have a fund worth an estimated £37,100 upon maturity.

Recent research by the leading CTF provider found that young/Key Stage One children most want to be a teacher, doctor or vet; all jobs which require a significant financial outlay in the future. Training to be a doctor could add an additional £48,000 to the bill.

The recession also means that more students are struggling to find summer jobs, which normally provide a much-needed cash injection to help them with their costs at university. As a result, parents may have to dig even deeper into their pockets if they want their school leavers to go to university at the start of the next academic year.

David White, Chief Executive of The Children's Mutual, said: "University can be as much of a millstone as it is a milestone. While parents will be pleased about their children's successes as they receive their A-level results and many look forward to university, the high costs involved can be a real financial strain to a huge number of students and their parents. For families planning to support their children through university, finding a lump sum to cover the costs can be very difficult. Often, parents are left with no other option but to dip into their savings or remortgage their house. This can have a serious impact of their own financial futures.

"From 2020 all 18 year-olds will have access to their maturing Child Trust Funds as they enter adulthood and the money saved in these could make a real difference to both future university students and their parents. Those who save £24 per month, the average amount amongst The Children's Mutual customers, could have a fund worth £9,750 when they reach age 18. We are urging parents of CTF eligible children to consider saving for their children's futures now so they don't miss out."

The Children's Mutual has developed an online calculator to help parents of younger children work out how much they, and their wider family, need to put aside to save for key financial milestones including higher education: www.thechildrensmutual.co.uk/ctfcalculator

For further information on The Children's Mutual please visit www.thechildrensmutual.co.uk