How to Support Uni Students Without Draining the Bank of Mum and Dad

With the new academic year approaching, thousands of new or returning students are beginning to prepare themselves. As are many parents, with 7 in 10 contributing financially. But how much do parents support their university-aged children financially? And how might this affect their own future?

Of course,  parents understandably want to support their offspring and provide the best possible education and future. However, bankrolling grown children can have a long-term financial impact on many parents, including the risk of delayed retirements, dipping into savings, and reduced pension contributions. 

This blog will explore just how much parents support their children, the impact it can have, and expert advice on how to balance being supportive without leaving themselves short.

How much do parents pay to send their child to university?

Research conducted by Opinium found that 71% of parents, whose children are at university or planning to attend,  contribute financially, with the average yearly contribution being £8,723. However, this number could be even higher. According to a report published by the Higher Education Policy Institute (HEPI) and software firm TechnologyOne, parents may have to contribute up to £14,000 a year for students to reach a minimum acceptable standard of living at university.

Due to the rising cost of living, and the government maintenance allowance currently only covering 65% of living costs, it’s no surprise that parents’ contribution is likely to rise out of necessity. Of course, another solution is for students to find paid work. The same report by HEPO found that without parents’ support, students would need to work 19 hours a week at the minimum wage to reach the basic standard. However, this schedule is much higher than what most universities recommend to ensure working doesn’t harm studies (15 hours maximum).

Why are parents expected to help out?

For many, supporting a child through university isn’t a choice; it’s an expectation that tends to come with the UK’s student finance system, especially now that maintenance loans don’t cover living costs for most students. 

On top of this, the amount a student receives for maintenance loans is means-tested against their parents’ household income. If parents earn above a certain amount, the maintenance loan a student receives is less, based on the assumption that parents will cover the rest, leaving many parents feeling as though they have no choice but to step in.

Which expenses do parents cover?

Due to many students’ maintenance loans not covering their full living costs, some of the key expenses that parents may cover include:

• Accommodation and living costs: Many parents will support with factors like rent and bills. Often, rent alone will consume maintenance loans. 
• Travel and transport: As many students tend to move further away from home, they’ll face transport costs such as train fares or fuel. 
• Books, equipment, and course materials: Certain courses require specific books and course materials, as well as laptops, that are often costly. 
• Food and groceries: As maintenance loans often only cover half of essential costs,  grocery costs can become a huge burden. 
• Personal expenses: Of course, buying personal items such as clothing and attending social events is often a luxury at university, but experiences that parents might not want their children to miss out on.
• Emergencies and unexpected costs: Unexpected expenses, such as laptops breaking or car breakdowns, always come up, and even if budgeting well, many students won’t be able to cover last-minute emergency costs.

The costs that parents cover will often differ depending on the maintenance loan that students receive, whether they work during university, and the area they live in.

The risks of supporting children financially through university

Although it often feels necessary to support children at university, it’s important that parents do this carefully and don’t leave themselves short or face financial risks.  

Often, parents will need to dip into savings in order to provide support, which leaves them at risk of not having a buffer for their own unexpected events. Covering these costs could also mean reducing retirement contributions, resulting in smaller pension pots or delayed retirement. According to research from Lenvi, a fifth of parents have even taken a loan out to help with university costs, which can leave them paying higher interest rates and impact their financial health. 

Many parents feel obligated to support their children during university, even if it does cause them financial stress, which can affect their mental wellbeing.

How to support without affecting your own financial situation

It’s completely fine for parents to support their children financially, especially with the current high cost of living, but it’s important to ensure you’re not impacting your financial future. Below are some tips and advice on how to manage this carefully:

• Prioritise Essential Support: When deciding how you’re going to support financially, prioritise unavoidable costs such as rent and bills, rather than funding nights out and luxury items.
• Set a clear budget: Work out exactly how much you’re able to contribute each term or year, without leaving yourself short or having to touch savings or pensions.
• Give gradual contributions: Instead of giving a lump sum upfront, provide smaller, regular contributions to help them better manage their cash flow and reduce the risk of overspending.
  
• Set boundaries and expectations: It’s important to speak directly to your children about what you can and can’t support them with and how much you can provide. Managing expectations and encouraging them to get part-time work can help them not rely too heavily on the bank of mum and dad.
  
• Regularly review finances: Check every year or term whether you can still provide the same financial support as you have previously. With the rising cost of living and potential unexpected costs, it’s important to remain flexible and aware of your own situation.

Supporting your child through university is one of the most impactful things you can do as a parent, but it can come with its challenges. With lower maintenance loans and the rising cost of living, many students may rely on ‘the bank of mum and dad’. If this financial support isn’t done carefully, you could face long-term consequences. Setting boundaries, budgeting, and reviewing often can help your child achieve their goals, whilst also safeguarding your own financial future. 

Important information:

This blog is for general information only and does not constitute advice. We recommend you speak to your financial adviser before making any decisions. The information is aimed at retail clients only. No statements or representations made in the article are legally binding upon Shackleton Advisers Limited or the recipient.

All references to taxation are in relation to UK taxation and are based on our current understanding of UK laws and HMRC practices. Tax reliefs may change in the future and may not be maintained.  Tax treatment is based on your individual circumstances. All other information is based on our understanding of current legislation and regulation which may be subject to change.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.

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