SIT research reveals parents recognise the need to start saving to fund rising university costs
Independent research carried out on behalf of The Scottish Investment Trust PLC (SIT), one of the largest investment trusts within the global growth sector, revealed that 63% of parents surveyed realise they need to save more frequently in order to meet the rising cost of university.
In the forthcoming academic year, undergraduates will spend an average £9,850 on their course, accommodation and living costs but will only receive a student loan of £3,145 (or £3,880 if studying in London)*, making saving for university imperative.
Based on this research, there is action parents and students could take to help fund some of these university costs.
1. Plan ahead by setting up a long-term savings and investment scheme for your children:
- Saving more was by far the most popular answer in the survey as to what plans parents had in place to ensure they could afford to send their children to university.
- In light of rising costs, only 17% of parents surveyed had not thought at all about setting aside any funds for their children's education.
- More women than men thought that they needed to plan to meet further education costs.
2. Students could consider building savings in advance by taking up a part time job, prior to starting university:
- The research indicated that parents surveyed expected children to contribute to some costs. 41% of parents said they were happy that their children contributed just a small fraction of the total cost while 21% would want them to pay a quarter of the total cost.
- According to the UNITE Student Living Report 2005 conducted by MORI**, 42% of students have a job during term time and work on average 14.5 hours a week. Students from less well-off backgrounds work on average 15.2 hours a week and 14 per cent of all students work more than twenty hours a week. Over two-thirds, 68%, of students claim they work to pay for basic essentials and this figure rises to 78 per cent of students from less well-off backgrounds.
3. Students could consider living at home as an alternative to university accommodation:
- Contrary to what their children might think about this, 16% of parents surveyed wanted their children to live at home while at university to save on housing costs.
Sherry-Ann Sweeting, Marketing Manager of SIT Savings Ltd, said, "We are pleased that the research indicates many parents realise that they need to save more regularly to meet university and other education costs. It is becoming increasingly important to consider making financial provision for your child's future sooner rather than later, particularly with the average graduate debt rising 12% to £13,500 – over the last twelve months***. Investing for your child on a regular basis can help build a valuable sum which could help to reduce the impact debt such as this has on their start in adult life."
The research was conducted for The Scottish Investment Trust PLC (SIT) whose children's savings and investment scheme, STOCKPLAN: A Flying Start provides parents, grandparents, friends and other family members with the opportunity to invest on behalf of a child.
Savers and investors can find out more information about STOCKPLAN: A Flying Start by calling 0800 42 44 22, by visiting SIT's website (www.sit.co.uk) or by asking an IFA.
Key product features of SIT's STOCKPLAN: A Flying Start are:
- No initial charges or annual management charges, which means the money invested goes further and is not eaten up by costs1.
- Flexible investment options: Regular investments (from £25 a month) can be stopped and restarted at any time. Occasional, one-off lump sums (minimum £250) can be invested at any time.
- You can now invest on behalf of a child through STOCKPLAN: A Flying Start in one of two ways: a designated plan or a bare trust.
- Twice yearly statements.
500 parents of children of university age and under (under-21s) from England, Scotland, Wales and Northern Ireland were involved in our survey.
In telephone interviews they were asked about their plans for meeting any educational costs their children may encounter, whether they'd expect their children to help out with the cost of education and how they themselves paid their way. The fieldwork was carried out during July 2004.
* Based on data from National Union of Students, 2005 (students from lower income families will be means-tested and may receive more).
**UNITE student living report 2005, conducted by MORI.
*** Barclays Annual Graduate Survey, 2005.
1External expenses (government stamp duty of 0.5% and dealing spread which has averaged 0.9% over the last 3 years) apply.