With levels of graduate debt soaring by 74% since 1998, and six out of ten students believing that their studies have suffered because of financial difficulties*, the latest findings show just a third of parents have begun saving to help fund their child’s university fees, and only a quarter plan to start saving before their child turns eighteen.
As part of an ongoing study into the financial pressures facing multi-generation households in ‘three-generation Britain', or 3GB**, Engage Mutual Assurance asked a GB representative sample of 1000 parents with children, how they plan to meet the rising cost of higher education:
Key findings include:
Almost a quarter of parents (23%) will advise their children to live at home and attend a local university
More than a third (35%) will urge their children to seek part-time employment to pay for their university costs
One in six (14%) parents will switch jobs to ensure their children can be provided for throughout their university life
One in five (19%) will work longer hours so that they can support their children through university
Andrew Haigh, Chief Executive at Engage Mutual Assurance, comments:
“With university tuition fees set to jump to £3,000 from September 2006, it’s worrying that so many parents have yet to plan how they’ll meet the growing costs associated with university education. It’s also a concern that children may be encouraged to stay at home and attend a local university, because it’s unlikely to be in a student’s best interests if their choice of course is determined entirely by affordability.
The introduction of Child Trust Funds last year has created an excellent opportunity for parents to take a longer-term view of tax-efficient saving for their child’s future. An investment of just £5 per month now could make a tangible contribution by the time their child reaches 18. Those who don’t have children eligible for a CTF could also consider using their ISA or other tax-exempt savings opportunities, because it’s never too late to start to save.”
Other findings include:
Almost one in ten (8%) parents will urge their partners to return to work to help meet the cost of their child’s university education
Just 25% of parents will begin saving before their child turns 18 years old
Mothers are more likely to encourage their children to remain at home and attend a local university (27% compared with 20% of dads)
Five per cent of British parents will urge their children to seek full-time employment after school – skipping university altogether
*The Student Income and Expenditure Survey, National Centre of Social Research and the Institute of Employment for the Department of Education and Skills, 31st March 2006.
**3GB is a new initiative by Engage Mutual Assurance to understand the impact of today’s financial pressures on family dynamics resulting in a trend towards three-generation households.
Engage Tax Efficient Savings:
FSA Tables’ lowest charging tax-exempt friendly society child savings plan1 investing in equities available2
Stakeholder Child Trust Fund2 with a low contribution rate of £5 per month
Education ISA2– tax efficient savings with a quarterly income option
e-friendly savings plan1– the lowest charges of any unit-linked friendly society savings plan
1. These are stock market based plans, the value of which can fall as well as rise. Investors may get back less than has been paid in.
2. The Engage child savings plan and e-friendly savings plan are offered by Homeowners Friendly Society Limited
3. The Engage child trust fund and education ISA are offered by Engage Mutual Funds Limited
4. Information based on a limited selection of 20 products taken from the tables prepared by the FSA on 24th March 2006.© The Financial Services Authority. The FSA does not endorse our company, this product or any conclusions drawn from this data and the list is based on the ‘charges in early years’ sort.
See www.fsa.gov.uk/tables then select ‘go to tables’, ‘endowments’, ’endowments table’, select the profile for a child contributing ‘£25’ and ‘tax exempt plans’.
The information contained in this press release is intended solely for journalists and should not be relied upon by private investors or any other persons to make financial decisions.
The Engage products listed are stock market based investments and their value can fall as well as rise. Customers may get back less than has been invested.