Parents underestimating the cost of education by almost 40%. 79% of parents provide financial support to their child during university. 68% of parents have had to bail their child out financially in an emergency.
Nottingham, 02 October 2014: As parents around the country pack their kids off to university this week, new research from Experian, the global information services company, suggests that many are underestimating the size of their financial contribution to support this child by almost 40%.
According to the Experian research, 79% of British parents help towards funding their child’s university education in some way, with 57% contributing to accommodation costs, 32% travel costs, 17% utilities and 34% costs relating to their child’s studies. In addition, a startling 68% have been called on to bail out their children in an emergency, despite 15% not having anticipated giving any financial support, leaving many in a tricky financial situation and highlighting the importance of educating children on money management as they find their feet financially.
While parents of students starting university anticipate paying £3,700 over a three-year course, parents whose children graduated in the last five years actually ended up paying out £5,160 – a difference of £1,460, almost 40% higher than the amount anticipated by parents of new starters (39.45%).
Of those whose children have already been through university, one in two parents found their child’s university career more expensive than anticipated, and 29% admitted to going without themselves in order to help fund costs related to their child’s education.
Julie Doleman, Managing Director, Experian Consumer Services, commented:
“University can be an extremely expensive time for parents and students alike, particularly if a family has more than one child in higher education at once.
“As young people start university, there are often unexpected costs that can be passed to parents. As well as properly planning your financial contribution allowing for hidden costs you may not have considered, it’s wise to have a frank conversation with your child to determine what they’re spending and what you can realistically help with. And when it comes to their own financial futures, university is often when young people start to build their credit files, so developing their money management skills is crucial at this stage to set strong foundations as they move into adulthood.”
Experian CreditExpert has provided the below tips for parents financing their kids throughout university:
1. Have the finance talk with your child before they go to university
Let them know straight away what is feasible in terms of your financial support. Some have found that setting a budget works with students when it is clear how much they can draw down on for day-to-day activities and what should only be seen as the emergency fund.
2. Involve them as much as possible in household finances and budgeting
Explain the ways bills are laid out; talk them through financial decisions, like taking out insurance or obtaining licences; get them to create the shopping list and help to select which items to buy in the supermarket, calculating the cost as they go; sit down with them to put together a monthly budget.
3. Remember your child needs to build up their own credit rating as well.
University life is probably the first time your child will have to manage their own money. It is also their first chance to start building a decent credit rating, which in the long run will help when applying for a mortgage or other loans. Don’t feel you need to cover all of their bills, be they for utilities or mobile phones. If they manage their own, they will be more equipped for life after university but also will have started to build their own credit rating.
4. Avoid taking out a loan to cover your child’s tuition fees
This is almost always a more expensive option than your son or daughter taking a student loan. Interest rates on student loans are still very low in comparison to other loans on the market. For English and Welsh students, the interest tracks the Retail Price Index (RPI) if the graduate is earning below £21,000 after graduation. On earnings from £21,000 to £41,000 the interest rate will gradually rise from RPI to a maximum of RPI plus 3%. Whilst studying, your child pays RPI plus 3%.
For more information please contact:
Experian Consumer Services
Joanne Leahy, PR Manager - 020 3042 4089 / Joanne.email@example.com
Experian is the leading global information services company, providing data and analytical tools to clients around the world. The Group helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score, and protect against identity theft.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended 31 March 2014 was US$4.8 billion. Experian employs approximately 16,000 people in 39 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.
For more information, visit http://www.experianplc.com.