How to financially support your children through university


Sending children to university is often an important goal for parents and parents-to-be. However, it can be difficult to know how it will impact your finances. Will the student maintenance loan be sufficient? Or will you need to provide additional financial support? The answers to these questions are not necessarily clear cut, and do depend on the extent of the help that you want to provide.

If you’re thinking about sending your children to university, here’s a quick breakdown of the costs and how we’ve helped some clients include financial support for their children at university into their financial plans.

Let’s crunch the numbers

The student maintenance loan is meant to help with living costs throughout university and it’s means tested - the amount you get is based on annual household income, as shown in the table below (for students outside of London).

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Let’s compare this to living costs at university. The biggest expense for students will be accommodation. This can vary depending on the university and the type of accommodation. According to a Which? report, other living expenses while at university average out to be £5,556 a year.

Here’s an example of what all of those costs could look like for students deciding to go to the University of Kent or Newcastle University:  

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So, if you went to the University of Kent, lived in the cheapest accommodation and received the lowest amount of maintenance loan you would need an extra £3,372 a year. If you went to Newcastle University, lived in the most expensive accommodation and received the highest amount of maintenance loan you would need an extra £2,680 a year.

This shows why some students either need financial help from their parents or to work part time while at university. Having to work while at university comes with its own worries which can impact education. It also means students who work have less time to focus on their studies compared to those who don’t. This doesn’t mean students shouldn’t work. Having a part time job allows people to learn valuable life lessons and helps with employability. It is necessary however to find the right balance between working and studying. When you are forced to work you may find yourself out of that balance.

Some parents struggle to support their children through university

Parents who are not prepared for these costs when they send their children to university could be forced into financial sacrifices. I have been working with my clients, Peter and Mary, on managing this exact situation.   

When I first spoke with Peter and Mary they just sent their oldest daughter, Jess, to university. Mary had started to work part time to focus on doing a course and with the drop in income they were just about getting by every month.

Like a lot of people they thought Jess would be able to support herself with the student loan she received. As soon as they booked Jess’ accommodation they realised that Jess would need help from them until she found a job to support herself. I worked with Peter and Mary for months on stripping back their monthly costs as much as possible so that they could help Jess through university. This affected their holiday plans and they had to make tough household spending decisions on a weekly basis. All of this led to stress at home and affected Jess as well as their two younger children!  

Planning ahead can make it easier

If planned in advance, parents can level the playing field by helping their children financially through university. Here’s how I helped my client Dave plan for his two children’s future.

Firstly, it is never too soon to start planning. Dave’s son was 2 years old and they were expecting their second child in the next few months. Like Peter and Mary, Dave wasn’t initially aware that he would need to contribute if his children went to University. He understood the need to have a pot of savings ready for when they turned 18 in case they decided to go. He agreed that if they decided not to go to university he could repurpose those funds to help them with their first house deposit.

Secondly, you should work out how much you need. For Dave, he agreed that he would give each of his children £6,000 a year to help them through university. It is important to adjust this figure so that it is in line with inflation. I increased it by 2% every year to represent the fact that things will cost a lot more in 16 years time. This meant that Dave now had a clear goal for his son, he wanted £24,710 to help him through 3 years of university.  

Thirdly, where do you put these savings? Because of the timeframes we agreed that Dave would build up an investment portfolio and draw from that when his children turn 18. Generally speaking, if you are not planning on using funds for at least 5 years you can look at investing them. By investing you are hoping that the investments returns will mean you contribute less to reach the goal. For example, if Dave invested £11,320 now and had an average growth of 5% per year for 16 years he would have £24,710 for when his son goes to university. That means he has contributed less than half of what was needed in the end. Of course this does depend on the performance of the investments which can go up as well as down.

We built this goal into Dave’s financial plan. This showed us that he needed to save £84 a month to reach his goal in 16 years time (assuming a growth rate of 5%) - an achievable amount for Dave at the time. The plan also showed that he wouldn’t have to compromise on his other goals like moving house and a comfortable retirement. In Dave’s case, he was on track for everything he wanted to do. By planning early he will avoid being in the same situation as Peter and Mary in 16 years time.