Student Finance Changes Highlight Spiralling Study Costs
From next year, students could face record bills when it comes to supporting their educational ambitions, with many parents being asked to help pick up the tab.
A university education can be a valuable advantage for young people entering today’s increasingly competitive job market. But the cost of attaining a degree now comes at a significantly higher cost than in previous decades.
Tuition fees hit record high
Consumer body Which? estimates the cost of a three-year degree outside of London (including tuition fees, accommodation and living expenses) is typically between £35,000 and £40,000.
A 2014 report from The Institute for Fiscal Studies paints an even starker picture. It suggests students will leave university with an average debt of £44,035 – a figure estimated to be nearly £20,000 higher than under the old system, which ended in 2012.
Student maintenance grants to be scrapped
Students from households earning up to £42,620 per year were, until now, able to subsidise their living costs with a student maintenance grant.
This funding will be scrapped from August 2016 and replaced with a loans system. For new full-time students in England starting their courses from August 2016, the maximum amount of support will rise by £766 to £8,200 a year (up to £10,702 for those studying in London) depending on your circumstances. However, it will only apply to students with household incomes of £25,000 or less per year.
Number of teenagers combining study and work plummets
Evidence also suggests fewer students are combining part-time work with their studies, increasing the nancial burden on many parents even further.
A report from the UK Commission for Employment and Skills reveals that the number of 16 and 17 year-olds combining part-time work with their studies has halved over the past 20 years, from just over two- fifths (42%) in 1996 to less than one- fifth (18%) in 2014.
Conversely, the number of young people participating in full-time education has grown substantially, from 2.1 million in 1996 to 3.2 million in 2014 – an increase of 50% – creating greater competition for each job opportunity.
Planning for a changing landscape
With costs rising and further changes on the horizon, the importance of a robust nancial strategy to support your children’s (or grandchildren’s) further education has never been greater.
Investing for children rather than yourself is subject to a specific set of rules. These can vary depending on the ownership, tax status and term of the investment, so it makes sense to seek advice before making any investment decisions. And, as with most investments, the sooner you put plans in place and begin saving, the better.
If you would like to find out more about investing for your children’s future, or would like to review your wider investment strategy, please get in touch.
