Students plan to go cheaper universities
A fifth of students surveyed for a student debt report plan to go to a lower charging university.
With university costs set to rise, parents and students are becoming increasingly aware of the financial and lifestyle implications of higher education, according to the latest student debt research from the Association of Investment Companies (AIC). Indeed, with the introduction of up to £9000 tuition fees in 2012, 21% of tomorrow’s student’s surveyed plan to choose a lower-charging university and 23% of parents surveyed intend to encourage their children to choose a lower charging university.
The financial strain on students is clear, 49% of students now expect to graduate with over £20,000 worth of debt (compared to 34% last year) and 13% think they will accumulate over £30,000 of debt. Some 45% of students surveyed who expect to have debt think they will be saddled with student debt for 10 to 20 years, and almost twice as many as last year expect to take over 20 years to pay off their debt (14% compared to 8% last year). Parents have also increased their estimations and for the first time are in agreement with their children about the financial costs of university: 50% expect their children to graduate with over £20,000 of debt.
The difficult economic environment has increased the strain of university costs with 88% of parents finding it harder to support their child financially at university. When asked, 25% of tomorrow’s students would like to delay starting university for a year and work full time instead in order to save money and 21% of parents were of the same opinion. Interestingly, with the introduction of higher tuition fees in 2012, 21% of students plan to go to a lower charging university and nearly a quarter (23%) of parents will advise their child to go to a lower charging university.
As university costs mount up, those planning to go to university are warming up to the idea of living with parents during term-time to avoid debt and this is certainly the case when compared to those already at university.
19% of parents say it is very likely that their child will live at home during term time and a further 19% of parents say it is fairly likely. This is in stark contrast with tomorrow’s students: 8% said they were planning to live with parents in term time to save money/ avoid debt, and would do this happily. Another 9% said they were also planning to live with parents to avoid debt/save money, but they would prefer not to, and 3% said they would live with parents during term time to avoid debt, but not for the full duration of the course.
Whilst tomorrow’s students are far less enthusiastic about the prospect of living at home during term-time than their parents, it is some way ahead of students already at university. For students currently at university, 7% said that they have lived with parents during term time to avoid debt, and have done so happily. But a further 3% said they have lived with parents during term time to avoid debt/save money, but would have preferred not to.
Annabel Brodie-Smith, Communications Director, Association of Investment Companies (AIC) said: “With tuition fees adding to the already considerable expense of university, families are clearly looking at ways to save money. Not surprisingly parents feeling the pinch are keen for their children to live at home and to attend lower cost universities."
Some 61% of students are worried about job opportunities (6% more than last year) when they graduate in light of the current state of the UK economy.
Some parents even doubt the benefit of a degree, with 18% of the opinion that a degree is not as valuable as it used to be and a further 8% encouraging their child to seek vocational training rather than pursuing a degree.
One fifth of parents surveyed (20%) intend to primarily finance their children through university but the majority (51%) of parents believe their children will be funded primarily through a student loan. Interestingly, the students think they will be more reliant on loans, with 67% of students intending to be funded primarily through a student loan and only 14% counting on their parents to primarily finance their university education.
Nearly two thirds of parents (65%) contribute or plan to contribute financially to help their child finance university. Nearly a quarter of parents (24%) who plan to contribute, plan to use all or most of their cash savings and nearly half (49%) plan to use some of their cash savings. A further 11% plan to sell their financial investments and 9% intend to sell their shares. However, drastic measures are being taken by some with 6% planning to take out a bank loan, 6% planning to remortgage their house and 5% intending to downsize their house.
When parents were asked what they would be prepared to sacrifice first to help their child through university, 24% were willing to sacrifice their annual holiday, 17% were willing to forgo a new car and 13% were willing to sacrifice home improvements.
Some grandparents are making or planning to make a contribution too with 11% of parents surveyed suggesting that the grandparents of their child are planning to contribute to their grandchild’s university costs. In over half (52%) of those surveyed suggesting that the grandparents intend to help out due to the tough economic situation.
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