How to financially support your child through university

Acceptance onto a university course is a proud moment. As students prepare to return to university this month, you might be looking ahead to how you’ll help your child or grandchild through higher education. 

Regularly putting a little aside when your loved one is young will help to give them a great start in life. But, if you want to ensure that your money will be used effectively, you’ll need to pass on some valuable financial lessons too.

Here’s your guide to how much a university education might cost, how it might be funded, and some simple financial lessons your child will need to heed if they’re to make the most of their experience.

University can be costly but help is available 

The obvious cost associated with university courses is the tuition fees. For the 2022/23 academic year, annual fees for an undergraduate degree stand at £9,250. This marks the fifth year in a row that fees have been frozen.

The simplest way to cover university fees is through a student loan. 

Other costs, such as those for accommodation, food, and books will need to be covered elsewhere, possibly through a means-tested maintenance loan.

Let’s take a look at each in turn.

A student loan

Applying for a student loan is the simplest way for your loved one to pay their tuition fees. 

While you might have money saved to help with the costs of higher education, a student loan has many advantages over other forms of debt. These include the fact that:

• Your loved one will only start paying off their student loan once they earn a certain amount. As of the 2022/23 academic year, the yearly earnings threshold for a Type 2 loan (one taken out after September 2012) is £27,295.
• Any amount under a Plan 2 loan that remains unpaid after 30 years is written off and does not need to be repaid.
• Whereas other debt can have a bearing on your loved one’s credit score, thereby potentially affecting their ability to get a mortgage or other types of credit in the future, a student loan doesn’t affect a credit score.

These factors make a student loan a great way of paying tuition fees. This remains the case even if you have funds saved, which you might find would be put to better use elsewhere.

A maintenance loan

Your child might qualify for a maintenance loan – in addition to the student loan to cover tuition fees – which can help towards other living costs. These might include everyday expenses like food, as well as helping towards accommodation costs.

The loan is means tested and the amount received will depend on several factors, including household income, where your child will live while they are studying, and the course start date.

Source: HMRC 

These figures show the amounts payable for the 2022/23 academic year.

3 simple budgeting lessons could help your loved ones look after their money

1. Take the time to plan a weekly budget 

Budgeting is key at all stages of life but can be particularly important for a young adult, away from home, and financially independent for the first time.

While you might have your own budgeting techniques for managing monthly income, budgeting with term-time student loans and grants can be quite different. Firstly, budgeting weekly is often the best way to proceed. 

Sitting down and working out incomings and outgoings is key, dividing disposable income over the weeks of the course. Once your child has a weekly budget, be sure they understand the importance of not overspending. 

2. Be savvy when spending 

When a weekly budget is tight, saving money on essentials can make a huge difference.

Encourage your child to be frugal by making a shopping list before completing the weekly shop, avoiding cash machines that charge a fee, and staying out of an overdraft, if they have one.

When making purchases, using a cooling-off period is always a good idea. This involves trying only to buy things that are needed, rather than wanted. Your child should sleep on any purchase, maybe by leaving it in an online trolley overnight, and only continue with the purchase if they still want it once the cooling period expires. 

While the occasional splurge might be manageable, instil the need to save for these in advance or to wait until the end of the loan period. This means your loved one will only be using the money they have left over.

3. Know where to turn for help

Managing money can be tough, so your loved ones must know where to turn if things become overwhelming.

This could be Student Services within the university itself, the bank, or friends and family. If your child is working part-time to supplement the loan or grant they are receiving, their employer should be able to help too.

Communication is key. If no one knows your child is struggling no one will be able to help. Instilling the importance of talking about money from a young age is vital to ensuring money isn’t seen as a taboo subject as they grow older.

Most importantly, stress the importance of avoiding “buy now pay later” schemes or payday loans.

Get in touch

If you’re looking to help a loved one through university but don’t know how best to go about it, and where this help fits into your long-term financial plans, we can help. Please get in touch via email at enquiries@hda-ifa.co.uk or call 01242 514563.