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News Release - Parents need to save £165 a month from birth to fund a childs university fees

News Release - Parents need to save £165 a month from birth to fund a childs university fees

Parents saving for their child's university education would need to invest £165 a month from the day their child is born to cover the fees, according to new research.

With the average student now graduating with debts of more than £50,000*, parents investing £165 a month into a typical 5% investment bond could be able to save around £7,500 more than parents who don't start saving until their child is 16, thanks to the potential returns their investments generate.

The research from financial services mutual Wesleyan, which is based on investments growth of 5% each year**, also shows how much extra would be needed if saving is delayed until the child is four.

Waiting until a child starts primary school means parents will need to set aside £213 a month. The missed investment growth during those four or so years means parents will need to find an additional £1,872 ahead of graduation. 

Parents who wait until their child goes to secondary school at the age of 11 will need to save £390 a month. Whilst parents who don't start saving until their child is 16 will need to put aside £820 a month and make up an investment shortfall of £7,620.

Nigel Pullen, Financial Planning Unit Manager at Wesleyan, said: "When a child is born, parents don't often think about saving for their university education. After all, it is nearly two decades away.

"But with the cost of sending a child to university now tipping £50,000, parents who want to support their children through to graduation should start saving as soon as possible.

"We know from our research that those parents who do, can save in the region of £7,500, thanks to the returns their investments can generate. As such, new parents should be making the most of tax efficient savings products - in particular utilising their full ISA allowance.

"Parents sending their children to university this year should also consider taking out gadget insurance. More than £140m worth of gadgets*** are thought to be stolen from students every year, so it's worth getting cover beforehand to potentially save thousands of pounds."

For more information on the benefits of investing visit our investments and savings page.   

Remember the value of investments and any income can fall as well as rise and you should always seek expert independent financial advice.

*FROM JULY 2017 INSTITUTE OF FISCAL STUDIES: Higher Education funding in England: past, present and options for the future.

This includes approximately £27,000 of tuition fee debt, £18,000 of maintenance debt and £6,000 of interest accrued over the three years of studying.However, as of this year, English, Scottish or NI universities can charge as much as £9,250 / year, so the tuition fee debt has been adjusted to £27,750, meaning the overall total of student debt is now £51,750." 
 
** The calculator is an example of what your investments might be worth and is not an illustration of potential returns.

Please note that this calculator is an example of what your investments might be worth and is not an illustration of potential returns.

The annual growth rate and inflation rate will depend on a number of factors over time including performance of the investment and changes in future inflation levels.

The calculator uses an annual growth rate for your illustration based on typically investing over the longer term (more than 5 years) using a mid-rate of 5% growth is considered average. This does not include any product charges so any personal illustrations from a financial adviser will differ from those shown above. 

Saving for University

Age of child when savings begin How many years until the money is needed Monthly payments needed to save target amount Total saved each year Total saved until graduation Cost of delay
          0          21       £165      £1,980     £41,580  
          4          17       £213      £2,556     £43,452       £1,872
          5          16       £229      £2,748     £43,968       £2,388
         11          10       £390      £4,680     £46,800       £5,220
         16           5       £820      £9,840     £49,200       £7,620

***2018 research from UNiDAYS

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'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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