University a Challenge for Cash Strapped Parents
Writes Dan Drage dan.drage@consumerchoices.co.uk
Parents caught in the grip of the credit crunch are struggling to fund their offspring’s university years.
According to research published by the Association of Investment Companies (AIC), 78% of parents think the credit crunch will make it harder to fund their children through university.
Similarly, the students themselves are putting salary ahead of vocation when choosing their career path in order to pay off accumulated student debts. 40% of students surveyed confessed their career will be driven by money ahead of their true vocation.
Student debt is having a similar impact on postgraduate studies with 10% of students scrapping plans to do postgraduate studies altogether and 15% of students putting postgraduate studies on hold until a time when they are more able to afford them.
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"It's alarming that few of tomorrow's graduates or their families really comprehend the financial implications of top up fees"
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Students and parents are both underestimating the amount of debt they will be facing come graduation time. The NUS estimate top up fees will add an extra £7,000 to the debt students graduate with. Students graduating this year will have around £13,000 of debt to contend with, whereas students graduating next year who have paid top up fees will graduate with a whopping £20,000 of debt.
When surveyed, students predicted they would graduate with only £12,000 worth of debt on average, while parents set their expenditure at the £9,500 mark.
Historically, these estimates have been reversed. Last year's poll showed would-be students estimated their average level of debt on graduation would be under £8,000, whilst parents estimated it to be under £10,000.
Annabel Brodie-Smith, Communications Director at AIC, had the following to say:
“It's alarming that few of tomorrow's graduates or their families really comprehend the financial implications of top up fees and both have underestimated the amount of student debt they will face on graduation”
She continues:
“Whilst there are many benefits that come with a university education, on graduation many young people find themselves struggling to repay their debt.”
Chris Eagle, Commercial Manager at Credit Choices, thinks this is where a child trust fund kicks in:
“I thought the credit crunch would force people to take a wholly realistic view of their finances, but maybe I was wrong? Investing in a child trust fund during the formative years of your children’s lives could help ease the financial burden when the university years come around.”
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