The university quarter in the centre of Edinburgh may be bustling with tourists and Festival-goers, but they will soon be heading home and the start of the academic year is just around the corner.
Lecturers are starting to return from their summer break, often spent in part on research on some treasured project. But more importantly, the students, especially south of the border, will know this week if they have secured at place at their preferred institution with the publication of A-level results.
Once the euphoria of that passes – all too quickly – there comes the reality of knowing how their families are going to pay for this higher education. Two reports just published show how far their expectations are from reality. The first, from Standard Life, shows that more than half of parents underestimate the maximum amount of debt their child could leave university with.
This survey focuses mainly on England, where some universities will be charging top-whack tuition fees, £9,000 a year, from 2012. It asked parents to work out how much would be involved if they then added other costs such as living expenses, interest on bank loans etc. As many as 58 per cent thought the total would be £40,000 or less – in fact, many put it at a lot less. But the latest figures from the Edinburgh-based financial institution put the actual maximum debt at a massive £54,000.
As a result, just over a fifth of parents have started to make regular savings to help ease the costs of their children’s university education. Nearly a quarter are putting money aside on special occasions, such as birthdays, or making one-off windfall payments. Over half of those with children aged nine or younger are putting money aside for their child’s university costs. However, 70 per cent of parents with children aged between 14 and 17 aren’t doing the same.
According to Julie Hutchison, head of international technical insight at Standard Life, some parents “have identified the need to save for their children’s time at university. Unfortunately their expectations of what that cost could be and therefore the target amount they want to save might actually be too low.”
The research shows that over half of parents who save on a regular basis are putting aside less than £50 a month towards their child’s university costs. Just over a quarter are saving £50–£100, while only 4 per cent are saving more than £200.
“Attending university,” Hutchison added, “can be expensive with the costs of tuition fees, living costs and course material all adding up over the years. Even though a student loan can be taken to cover all these outgoings, parents can also seriously help reduce these costs. Parents will need to decide when they want to gift the money to their child, as this will determine which savings method they should use. Do they give them the entire fund before they go to university, make partial withdrawals to help cover certain costs such as accommodation fees, or keep the money invested and help them clear their debt following graduation?”
It’s an important decision because the Lloyds TSB Student Finance Report suggests that 57 per cent of students are struggling to make ends meet. 17 per cent of full-time students, it says, do not have enough money to get through the month and a further 40 per cent are only just managing their finances. Over half of all students have now taken on paid work, mainly in a bid to support themselves at university, but many of these admitted that it was having a negative impact on their studies
The report shows that, on average, students have an annual income of under £6,000 a year, half of which is derived from student loans. Those in Scotland survive with the lowest incomes, while those in London and Wales are in receipt of 4 per cent above this average. With such limited incomes, it is hardly surprising that so many students are struggling financially.
40 per cent are only just meeting monthly outgoings, while almost a fifth of full-time students do not have enough to cover all their essential spending each month. The majority of students say that last year they sacrificed going out or spending on non-essential items to help make ends meet. More than one in three say that they raided their savings to help get by, a similar number to those who say they went for help to friends or family to get through the month.
“Going to university is meant to be a once in a lifetime experience, but students today not only have the worry of taking on a large debt burden,” says Jatin Patel, director of personal current accounts at Lloyds TSB, “but the rising cost of living means many are also struggling to make ends meet whilst they are still studying.
“Paid work can be a huge benefit to students as it can give them valuable experience for later on in life; however, it should not be impacting their studies. With finances so tight students need to ensure they are making use of all the discounts and money management tools available to them to help them manage their finances.”
However, for a few lucky students, there is an alternative. For the last four years, HSBC has been running a competition where students can win a £15,000 bursary. The competition, hosted on the social networking site Facebook, is open to all UK students starting their first year of university this autumn. Entrants have to create and upload a 90-second video to YouTube, and submit a short application form that answers the question: “How would £15,000 help you make your mark on the world?” The competition entry deadline is 15 September.
Juliet Chappell, won one of the HSBC student bursaries in 2010 because of her passion for her subject area and her commitment to using her time at university to benefit others. She posted a video describing her passion to set up a theatre in education company to work with counsellors to develop and run workshops to help bereaved children of all ages.
Helen Gentry, head of student banking at HSBC, explained that the competition allowed “eight students to win peace of mind while they study, so they can pursue a dream project of their making. We were overwhelmed by the creativity and altruism of last year’s entrants – I’m very excited to see more great ideas from this year’s videos.”
The top 15 videos, as voted on Facebook, along with a further five selected by HSBC, will then be shortlisted and the final eight winners will be decided upon by a panel of judges including Usman Ali (vice-president of the National Union of Students), Emerson Osmond (head of information and advice at UCAS), Brendan Cook (UK general manager, HSBC) and two past winners of the bursary, Juliet Chappell and Ibrahim Khan.