University may be a long way off for your children or grandchildren, but before you know it, they’ll be collecting their A Level results and preparing for their time in higher education.
Going to university can be in their best interests for some obvious reasons, career aspirations and general life experience being the most often quoted among them.
Some don’t get to go because of financial concerns, however, while 71% of students in 2020 said they were worried about making ends meet. The average graduate debt, meanwhile, is expected to reach £47,000 this year, which will put off many potential students from actually going to university.
And yet, only around 11% of UK parents put money aside specifically for their child’s education.
Why should I save for my child or grandchild’s university education?
Parents and grandparents would be forgiven for not understanding the importance behind helping to finance their children’s and grandchildren’s education. After all, can’t they claim loans to cover the costs?
Students can cover the full cost of their tuition fees through a Government loan, but what they get to cover living expenses depends on their household’s income.
Known as maintenance loans, households with higher incomes will get less money. What your child gets also depends on whether they live in or outside of London, or at home while studying.
A full breakdown of what you can get can be found here. Alternatively, you can input some data into the Government student finance calculator to see what your child could get.
The system means that students at the top end of the table aren’t expected to require money from their parents to get through university, although it’s not unheard of.
Assuming your child studies outside London, here’s how much student resource website Save the Student says parents and guardians are expected to contribute to their child’s education:
| Household income | Maintenance loan | Expected parental contribution |
| £25,000 or less | £9,488 | £0 |
| £30,000 | £8,809 | £679 |
| £35,000 | £8,130 | £1,358 |
| £40,000 | £7,450 | £2,038 |
| £45,000 | £6,771 | £2,717 |
| £50,000 | £6,092 | £3,396 |
| £55,000 | £5,412 | £4,076 |
| £60,000 | £4,733 | £4,755 |
| £62,286 or more | £4,422 | £5,066 |
Therefore, the system is actually constructed so that many students need financial help from their family to go. The last thing you want is your child or grandchild to drop out because of financial pressures.
They could work, and some benefit socially from bar work and similar jobs. But others say they would have received better results and their mental health would have been better if they hadn’t had to work during their degree.
What can you do to save?
Parents usually prefer to save money for their children exclusively in cash, rather than in investments, with four out five preferring this option.
From our experience, many simply feel it’s safer to save in a cash ISA or fixed terms account than it is to invest. The risk is too much for their own savings, let alone the ones they’ve made for their child.
We fully recognise these concerns, but unfortunately, saving in cash may not be the best option for you and your child, given the ultra low interest rates we’re seeing currently, which don’t offer much return.
What’s even more concerning is that if living costs continue to rise faster than interest rates, then your savings might actually start to depreciate in value over time.
Either way, you should start saving early so you can put aside a small amount of money per month or so.
Doing this means there shouldn’t be panic as you realise you can’t give what you need to, or that you’re forced to drastically cut other expenses, including holidays and expensive meals.
How can we help?
If you want to start saving now, a bolder approach may be the best approach. This can be daunting, but rest assured that you don’t have to go it alone.
At Bulley Davey Wealth Management, we can help you plan your savings so your wealth is preserved and your children or grandchildren can get the maximum benefit out of it.
We can also help you work out a blend of sensible and safe investments made in payments suitable for your situation – good planning won’t put you on the backfoot for everyday expenses or special occasions and holidays.
Reach out to us at 01775 718850 to talk about saving for your child’s or grandchild’s future.