Two thirds of British parents have embraced austerity by cutting back on their standard of living to pay for their children’s university education, according to a new poll.
The research, from Nationwide FlexStudent, also reveals that many students spend their loans within the first few months on a range of outgoings, from holidays and cars to nights out and new clothes.
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Dan King, Nationwide’s Head of FlexStudent Current Account, said: “University can be an extremely expensive time for parents and students alike and often parents are expected to cover the shortfall, putting them under increased pressure and resulting in tightening their purse strings.
“For students to manage their own financial situation effectively, they need to understand how finances work and learn to budget, so they can stand on their own two feet.
The research, which coincides with the roll out of Nationwide’s new FlexStudent current account, highlights that parents quickly find themselves stuck on a strict budget when their child goes to university, with many discretionary outgoings being reined in. This results in over two thirds (68 per cent) having to make up the shortfall themselves. The top five spends falling by the wayside include:
Many parents are forced to take more extreme measures to ensure their children benefit from a university education, with nearly one in six respondents (15 per cent) borrowing money or getting in to debt, and one in seven (14 per cent) taking a second job or delaying early retirement (14 per cent).
But with parents estimating the bill for university to be in the region of £2,500 per year, totalling £7,500 for a three-year course per child, it’s perhaps not surprising that cutting basic outgoings is often a foregone conclusion.
While parents are forced to scrimp and save, the poll reveals that students are less willing to sacrifice their lifestyle if they run out of money, with around one in three (30 per cent) running to their parents when they have no money in the first instance, rather than forego nights out (5 per cent), cutting back on what they spend on food (5 per cent), getting a job (9 per cent) or doing more hours at work (11 per cent).
Students polled also admitted to being frivolous with their student loan, with 29 per cent saying they spend it all within a few months of receiving it, and just over one in ten (12 per cent) admitting to spending it in the first month. More than two thirds (67 per cent) have used it to fund nights out, buy nice clothes (67 per cent), party (31 per cent), go on holiday (30 per cent) and buy a car (9 per cent).
But while undergraduates are having fun, two thirds of students polled (65 per cent ) haven’t thought about how to pay off their student debt and nearly one in ten (7 per cent) think they will finish university and walk into a job paying at least £40,000.
To compound the issue, the majority of parents (85 per cent) surveyed admitted that they would give their child money if asked, with over two thirds (68 per cent) saying they wouldn’t ask for it back, one in five (19 per cent) admitting they would give their child money with no questions asked and only 3 per cent saying they wouldn’t give their child money as they want them to be independent.
To know or not to know
When asked whether they understand budgeting, nearly seven in ten (68 per cent) students feel they were insufficiently taught about finance and were ill prepared for student life, with nearly a third (31 per cent) saying they taught themselves everything they know about how to manage money.
King added: “From an educational standpoint it’s vital that students are given guidance before and during university life, that’s why Nationwide, as a mutual, has created a student current account that is simple and flexible to use, with an interest-free and fee-free overdraft that puts the student in control.
“It also comes with a whole range of interactive education support and tools at www.yourstudentmoney.co.uk (This link will open in a new window), helping to ease the pressure financially for both parents and students.”