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Parents must save early to avoid big bills if they want to help with children's university debt

Soaring student debt means parents hoping to help with their children's university costs may have to find almost £30,000.

Research from Wesleyan, the specialist financial services provider, found professionals would like to ease their children's student debts by, on average, contributing towards two thirds (67%)* of their children's university costs.

With today's students graduating owing an average £44,500**, Wesleyan calculates parents will still need to find £29,815 by the time their child finishes university to cover their contribution.

However, by planning ahead, they could make it easier to cover their share, and make the most of investment growth, by putting away just £95 a month*** from their child's birth until graduation at 21.

If they put off saving until their child starts primary school aged five though, they will need to save £132 a month - forcing them to save an additional £1,400 before graduation to make up for lost investment growth - while waiting until they begin secondary school at 11 will mean an increase to £224 a month.

Waiting until their child has taken their GCSEs aged 16, means the amount parents will need to save more than doubles to £472 a month - and also that they will have had to put away £4,380 more than if they had started saving at birth.

If parents are planning to cover the entire cost of the £44,500 university debt, this would require them to make monthly savings of £142 from their child's birth until graduation, £197 from the age of five, £335 from secondary school age (11) or £705 from GCSE age (16).

Vicki Wentworth, Wesleyan's Chief Customer and Strategy Officer, said: "Education costs have soared in recent years and it's expected that debts will rise even further in the years to come.

"With graduates facing larger debts when they finish their education, it is understandable parents want to help where they can, even if they don't intend to cover all the costs. The message for them is simple - the earlier you start saving, the more affordable it will be.

"Parents should ensure they have the right long term savings plans in place and make the most of tax efficient savings products, and in particular utilise their full ISA allowance."

As well as assisting financially, parents can also help their children by getting them into good saving habits early.

Vicki added: "As our research shows, many parents are prepared to pay for some, but not all, university costs, which will still leave their children with debt. With this in mind, parents should help instil good financial habits in their children from a young age, to help them cope with their student debt and ongoing money matters once they've graduated."

For more about the benefits of investing sooner, go to www.wesleyan.co.uk/investments-centre/online-savings-calculators/cost-of-delay-calculator.

Wesleyan is a mutual financial services specialist for doctors, dentists, lawyers and teachers.




* Survey of 417 doctors, lawyers, dentists and teachers by Censuswide, Feb/March, 2015

**‘Analysis of university debt for graduates starting from the £9,000 a year tuition fee by Sutton Trust, Degrees of Debt report, April 2016

*** The monthly savings calculation uses an annual growth rate for illustration based on typically investing over the longer term (more than 5 years) using a mid rate of 5% growth that is considered average. This does not include any product charges so any personal illustrations from a Wesleyan Financial Consultant will differ from those shown above. For more go to www.wesleyan.co.uk/investments-centre/online-savings-calculators/cost-of-delay-calculator

'WESLEYAN’ is a trading name of the Wesleyan Group of companies.

Wesleyan Assurance Society and Wesleyan Bank Ltd are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Wesleyan Financial Services Ltd, Wesleyan Unit Trust Managers Ltd, Practice Plan Ltd and DPAS Ltd are authorised and regulated by the Financial Conduct Authority.  Advice about investments, insurance and mortgages is provided by Wesleyan Financial Services Ltd.

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© 2018 Wesleyan Assurance Society