Parents of UK students dig deep to fund university costs

{"text":[[{"start":6.32,"text":"Parents are increasingly willing to borrow, sell assets or delay their retirement to help fund their children’s university education, according to new data that shows 11 per cent of families who financially support their children expect their overall contribution to reach six figures."}],[{"start":23.2,"text":"University financing will be coming into focus for many families as thousands of students across the UK brace for A-level results next week, with the average total cost of a university education hovering around £70,000, according to student finance experts."}],[{"start":39.17,"text":"More than a quarter of parents or grandparents who currently contribute, or plan to contribute, towards a child’s tuition fees and living expenses expect to provide more than £50,000, according to research by wealth manager Rathbones. One in nine expect to pay more than £100,000 to help relieve the student debt burden, while around a third anticipate spending between £25,000 and £50,000."}],[{"start":65.52,"text":"But many families reported having to make significant sacrifices to provide such sums: around a quarter of the paying parents surveyed said they expected to have to delay their own retirement or take a hit to their standard of living to pay university costs. One in 10 expect to have to borrow, while 8 per cent anticipate selling assets."}],[{"start":84.82,"text":"Stretching to cover these costs could have a negative impact on parents’ own longer-term financial security, warned David Little, partner in financial planning at wealth manager Evelyn Partners."}],[{"start":95.714,"text":"“We’ve seen parents raid pensions, cash in investments at the wrong time, or even take on debt to fund university costs, only to find they have fewer options later in life,” Little said. “Children can borrow for education; parents generally can’t borrow for retirement.”"}],[{"start":110.64,"text":"Estimates for the total cost of a university education vary by region, as living expenses and accommodation costs differ across the UK."}],[{"start":118.933,"text":"Tuition fees will make up a large chunk of the overall outlay: in England and Wales, fees will be capped at £9,790 a year from September, while Scottish students in Scotland can study for free. For residents in Northern Ireland, study fees are capped at £4,985 a year."}],[{"start":136.761,"text":"Taken together, the average cost of a university education in the UK amounts to roughly £70,482, according to research by Save the Student, a site that provides financial information and budgeting advice to students."}],[{"start":150.8,"text":"For many, much of these costs will be covered by student loans, which in England average £47,900 upon graduation, according to government figures. Repayments are based on future income and are typically 9 per cent of earnings above a given threshold, which for those starting university in September will be £25,000. Any outstanding debt after 40 years will be written off."}],[{"start":175.073,"text":"Winston Ruddick, financial adviser at independent financial services consultancy Broadstone, said parents who contribute need to be clear about the differing outcomes of paying all costs or making a smaller contribution towards the student loan."}],[{"start":189.2,"text":"While paying off the entire balance could avoid years of repayments and interest, Ruddick warned: “A more modest, partial payment will not reduce the graduate’s monthly deductions, which are based on earnings rather than the loan balance . . .  parents may simply be paying down debt their child would never otherwise have repaid.”"}],[{"start":207,"text":"Helping with living costs may provide more immediate value than paying tuition fees, Ruddick said, and should be paid on a monthly basis to give the student experience of budgeting."}],[{"start":216.993,"text":"Tax efficiency and the use of trusts should also be considered when planning university funding, Clare Munro, senior tax adviser at Weatherbys Private Bank, said."}],[{"start":224.88,"text":"“Regular payments from parents will come from income that has already been taxed, but if a young person can receive their own income from a trust or family company, you can then use the child’s personal tax allowance and basic rate bands,” Munro said. “If the child holds growth assets, they may make gains and use their annual £3,000 capital gains tax allowance.”"}],[{"start":245.76,"text":"However, Little argued that trusts are too complex a solution for most families and could present them with an unnecessary administrative burden."}],[{"start":256.64,"text":"Nearly half of parents or grandparents currently paying, or planning to pay, towards their child’s university costs still believe most well-paid jobs require a degree, yet Rathbones’ research showed that roughly one-third also believe graduates now face weaker job prospects than previous generations, a shift partly fuelled by the rise of AI."}],[{"start":277,"text":"Ed Wood, financial planning director at Rathbones, said: “Parents haven’t lost faith in university, but they are taking a more hard-headed view of its costs and benefits. Many still see a degree as an important route to a successful career, but they are increasingly weighing that against student debt, alternative pathways and a rapidly changing jobs market.”"}],[{"start":null,"text":""}],[{"start":298.64,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1786334610_2735.mp3"}