Parents aren't saving for university fees
Over half of parents aren't saving to contribute to their child's university fees and with fees set to rise to up to £9,000 per year, from September 2012, graduates are set to finish university in increasing debt, according to research from M&S Money.
In addition, out of the 48 per cent of parents that are saving for their child's university education, 49 per cent didn't start saving until their child was four years of age or older, with over 32 per cent of those waiting until their child was seven or older. While this may have provided ample time in the past, rising fees now mean parents will need to start saving much earlier.
The fee increase means parents hoping to pay their child's fees in full will need to save £27,000 by the time their child reaches 18; an average of £1,500 per year, this increases to £2,455 per year (over £200 per month) for those waiting until their child is aged seven before they start saving, and with inflationary rises this is only set to increase.
From next year, parents hoping to cover their child's cost of living, as well as their university fees, will need to save a whopping £48,409. This means those starting to save from the year their child is born will need to save over £2,689 per year for 18 years, while those waiting until their child reaches the age of seven will need to save around £4,400 per year for 11 years.
The research reveals the number of parents saving for their child's university education varies across the country; parents in London prove the savviest savers with 65 per cent saving for the child's university fees. In contrast, parents in the North East are saving the least with 73 per cent admitting to not saving for their child's university education.
The survey also shows the impact gender has on savings as just 43 per cent of Mums admit to saving for their child's university education, compared to 60 per cent of Dads.
Paul Stokes, Savings and Investments, M&S Money, commented: "While the fee increase means many parents won't be able to cover the cost of their child's university education in full, every little helps, and regardless of how much you can afford to put away each month, it's important to remember that there isn't a quick fix when it comes to savings, so it's vital to start early.
"There are a wide variety of savings options available, so when planning your savings for your child's university fund, it's important to consider how much you can afford to save, over what time period, and what return you hope to get. For parents hoping to increase their return, you could also consider investing your money in funds or shares."
Follow Paul's top tips on helping your child through university:
Savings - Fixed term options enable you to save at a fixed rate so you have the reassurance that you know what you're going to get back; the longer the term, the longer your interest is fixed
Investments - Such as investment funds and shares - can yield a higher return, however, these are designed for the long term, rather than the short term, so shouldn't be considered a quick fix
Tax efficient savings - Whether you choose to save or invest your money, you should look at a tax-free, or tax-efficient ‘wrapper', such as a cash ISA or stocks and shares ISA
It's never too late - Whether you started saving early, later, or haven't started yet, remember, it's never too late. Even if you can't cover all of your child's university fees, every penny helps
Make a budget - When the time comes for your child to head off to university, no matter how much you've saved, make sure you sit down with your child and plan a budget
Reduce costs - There are many ways to reduce costs while at university, for example, living at home, purchasing or borrowing second hand books and taking cost-effective transport options, such as walking, car sharing or using public transport.
Don't pay twice if you don't need to - For example, you could take out a home insurance policy that also covers your child while at university, preventing the need for an additional policy