Each year, like migrating flocks of birds, tens of thousands of university students fill the motorways and trains as another new chapter of their lives looms ahead.
Their time at university will provide helpful skills and knowledge, but this does come at a cost. A recent report by the Institute of Fiscal Studies estimated that students can expect to leave university with £57,000 worth of debt.
With the current maintenance loan often unable to cover the cost of living and the recent rise in tuition fees, the ‘bank of Mum and Dad’ has never been so important.
How much should you expect to contribute towards your children’s living costs?
There are a lot of factors to consider when deciding how much to contribute. It depends on many variables such as your financial situation, number of dependents at university, and the living costs.
You might consider paying off your children’s tuition fees to reduce their debt. Before you do, think again and read this blog. Tuition fee debt is a tricky and complex topic.
1. Help them with their rent
Apart from tuition fees, the next largest living cost for a student is accommodation. The average rent for students across the UK comes to £535 a month. In London, they can expect to pay an average of £640 a month. Utility bills and groceries will each cost around £50 a week on top.
The maximum loan a student can receive is £8,700 outside London and £11,354 inside London. This only applies if your household earns under £25,000. Use the table below to estimate how much you would need to make up the balance.
For students living away from home studying outside London
For students living away from home studying in London
Your added funding will go a long way in providing financial support towards your child’s maintenance. Funding can go towards the monthly rental costs, household bills, course materials, and groceries, which will have a beneficial effect on their uni experience and reduce their debt.
2. Consider using food gift cards
This is an alternative way of ensuring the money you give your child at uni gets spent on essentials, providing you with peace of mind in knowing your child will eat well throughout their studies. Also, your child will have one less thing to worry about (a full stomach is reported to aid concentration).
The cards are simple to use. You get two cards – one for yourself and one for your child – which are linked. You add money to your card either online or in-store, which tops up your child’s card. They can then spend the credit only on items within the shop. You can keep track on your end to check if the balance is low and needs topping up.
The card is free and is a good way for you to keep some level of control but also gives your child the independence uni promises.
The same method can be applied to funding course books and uni equipment. Student libraries will stock copies of most of the reading material. Your child will have to be quick as there will be limited copies available.
A study by the Times Higher Education found students spent £60 a month on course materials. Gift cards from sites such as Amazon are a way of making sure your money is going towards your child’s education.
3. A good time to practice with money
University may be the first time your children have had to manage their own money. With a couple of thousand in the bank, they might think this will last the whole term. After a few nights out drinking, a couple of shopping trips, and takeaways, they will find out how money can disappear.
Research by Rowe found children learn more about their finances from their parents than any other source. What you teach your children and the examples you set will have the largest effect on how they handle their finances.
You can give your children practice with money in a variety of ways, such as providing them with regular allowances, rewarding good grades with financial incentives, or encouraging them to save for meaningful purchases. The specifics do not really matter, nor does the amount of money. The important thing is to give your children hands-on experience with money early, when the stakes are low and good habits can be made for life.
You should let them make their own mistakes. You can help them learn from those and develop good habits before they’re living on their own.
For more ideas on how to teach your children to manage money well, take a look at our pocket guide to children and money.
Three different ways that you can financially support your children at uni have been explained – whether it’s paying for their rent, covering household bills, or using gift cards to ensure your money is being spent on their education – as have the importance of educating your children about budgeting and giving them practice with money early on.
If you would like to learn more or discuss the pros and cons of helping your children or grandchildren financially at uni, please contact the team at Capital.