When UK parents were asked how much they expect the total cost of sending a child to university would be, taking into account all potential costs including tuition fees (and their increase to a maximum of £9,000 in 2012), student loans, banks loans and living costs plus any other expenses, the average answer was £40,000.
Standard Life said the actual maximum cost of sending a child to university is in the region of £54,000 – a potential shortfall of £14,000.
On a positive note, the research also revealed that many parents are saving for their child’s university costs, with a fifth (21%) having already begun making regular savings and nearly a quarter (23%) putting money aside on special occasions – for example on birthdays or one-off windfalls.
Julie Hutchison, head of technical insight at Standard Life, said: “The findings of our research are positive as they show that parents have identified the need to save for their children’s time at university. Unfortunately their expectations of what that cost could be and therefore the target amount they want to save might actually be too low.”
Standard Life also revealed that more than half (53%) of parents who save on a regular basis are saving less than £50 a month towards their child’s university costs, 27% are saving £50 to £100, 7% are saving £101 to £200, and 4% of parents are saving more than £200.
Out of the 56% of parents who are not saving for their children’s university costs, almost two-thirds (63%) say they cannot afford to, with one in ten not considering it.
Hutchison added: “Parents can possibly identify where they can utilise a pre-existing payment that’s coming to an end – this could be nursery fees, or a loan or credit card repayments. If they can continue to save this same amount it will allow them to make a saving towards their children’s university debt, without impacting their own disposable income.
“If parents invest their money in the right tax-efficient savings product, such as an ISA or offshore bond, they can make their savings go a lot further. The tax benefits combined with the efficiency of compound interest could help grow their savings considerably and could make a significant difference to them achieving their financial goals and objectives.”
