Top money tips for parents with kids preparing for university
Find out how much it will cost and how to budget for it
Whether your child is about to head off to university or it’s an option in a few years’ time, you might be wondering what it will mean financially. Most students take out a loan to pay tuition fees, but parents often chip in towards their child’s uni costs as well. So, what’s the best way to do it and what financial support is available elsewhere?
Read on to find out what you need to know about the cost of going to uni – and importantly, how you could fund it.
The cost of going to university
Tuition fees (up to £9,250 a year, if you’re studying in England, Scotland or Wales) will be a big part of your child’s expenses while at university, but they’re not the only costs they’ll have to pay:
- Accommodation costs: free (to them!) if they’re living with you, but if they’re living away from home the annual average cost of university accommodation is £4,875 (based on a 39-week contract). The cost varies wildly if renting in the private sector and, for those in London, is typically much higher.
- Living expenses: typically approximately £540 a year on water, gas and electricity, £804 on food and £504 on clothes. Other living costs include takeaways and snacks (£288), phone and internet (£312).
- Transport costs: some students spend very little, but on average, expect to pay £996 a year, or around £83 a month.
How to pay for it
Your child doesn’t have to pay their tuition fees upfront and parents aren’t expected to pay towards them either. Most students take out a student loan for their fees – Save the Student’s National Student Money Survey 2018 found that 83 percent of undergraduates take out a student loan.
Students don’t pay back the loan while they’re studying, but once they start earning more than £25,725 a year, they’ll pay nine percent of their salary above the threshold level. So, for example, if your child earned the average full time salary of £29,588 a year, they’d pay back £29 a month.
Parents (and graduates) can make extra payments, but it may not always be worth it because any money owing is written off after 30 years.
- How parents can help
According to the National Student Money Survey, 73 percent of students get some financial help from their parents, receiving £138.50 a month, on average. How much you can help will come down to your own finances, so a good starting point is to look at what you have coming in and going out.
If you don’t already have a budgeting app, you can easily do your own budget on a spreadsheet. Once it’s there in black and white, it’s easier to see where you can cut back. [Editor’s note: our article, Top 5 budgeting apps, may be a good starting point.]
You may be able to save money by getting a better deal on your mortgage, energy bills, insurance and/or credit card. Citizens Advice estimates that we’re paying an average of £877 extra a year by way of a ‘loyalty penalty’, across mortgages, savings, home insurance, mobile phone and broadband. [Editor’s note: our article, How to save money on your utility bills, gives some useful ideas about how to reduce these costs.]
If your child isn’t good with their own money, it may be better to pay a bill direct. Otherwise, a regular amount paid into their bank account will help them budget.
- A part-time job
Many students combine studying with a part-time job. Your child will have their own allowance, so can earn up to £12,500 (in tax year 2019-20) tax-free. Make sure they’re not too ambitious about what they’re able to do – their degree should come first!
- Bank overdrafts
Most of the big banks have accounts specifically for students. These usually offer an interest-free overdraft of up to £2,000 or £3,000. The amount depends on the bank and which year of study your child is in.
- A maintenance loan
As well as the student loan, your child may be able to get a maintenance loan to help with living costs. The amount they can borrow depends on whether they’re living at home and, if not, whether they’re studying in or outside London, or abroad.
The most your child can borrow, in the 2019-20 tax year, is £11,672. That’s assuming that they’re studying in London and not living with you. According to the Student Loans Company, in 2017-18 students actually borrowed £5,490 on average.
- Scholarships, grants and extra help
Your child may be able to get a scholarship to help with their university costs. Several universities offer them, and there’s also support from trusts, charities and companies. Some companies also offer degree apprenticeships, where students study alongside work (and don’t have a student loan to pay off once they graduate).
If you want more information on scholarships and grants The Scholarship Hub and the GrantFairy app are good places to start, and the charity Turn2Us has a grant finder on its website.
Students who pay for childcare, have a disability or a mental or physical health problem may qualify for extra government help.
Before making financial decisions always do research, or talk to a financial adviser. Views are those of our mentors and customers and do not constitute financial advice.