A fifth of parents raid their savings to help with uni costs

A fifth of parents raid their savings to help with uni costs

Almost 20% of parents who help their children with the cost of university are prepared to use all or most of their savings, research has found.

Some 55% said they would use some of their cash savings and 12% would sell shares and investments, the Association of Investment Companies' (AIC) has revealed.

A minority of parents were willing to take more drastic measures - 7% would resort to taking out a loan, 6% would move to a smaller family home and 4% would remortgage.

The list of perks they were willing to forego included an annual holiday (26%), a new car (18%), early retirement (13%), home improvements (12%), and buying a bigger home (11%).

The AIC also found that parents and students alike significantly underestimate the amount of debt the average student can expect to rack up over the course of a three-year degree.

While students starting their course at UK university in 2012 can actually expect their debt to have climbed to £53,000 on graduation - according to the student guide Push.co.uk - parents think it'll only come to around £22,000 and students themselves expect it to be more like £27,000.

The bank of gran and granddad

While 63% of parents expect to help their kids shoulder the cost of going to university, the bank of gran and granddad is increasingly stepping in to help too with 16% of parents saying their own parents are contributing, compared to 14% in 2013, 13% in 2012 and 11% in 2011. The average amount grandparents are chipping in with is now £1,907 per year.

Annabel Brodie-Smith, spokesperson for the AIC, said: "As university expenses continue to spiral, reliance has increased on the bank of mum and dad, and now the bank of grandma and grandpa is becoming significant.

"With some forward planning, a small investment is worthwhile over the long term and some parents could avoid having to raid their cash savings. A saving of £50 per month over 18 years in the average investment company has grown to £26,206, which would be a big help towards university costs. Over the same period, a lump sum of £1,000 would have grown to £4,020."

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