After a difficult start to the year, followed by exam and then clearing chaos, many students will be heading to university next month.

Whilst the continuing threat of coronavirus means this cohort will face a unique experience and a distinctly novel set of challenges, there will still be the same costs to consider.

If your child is heading to university this autumn, how much have you put aside to cover fees, accommodation, and living expenses? If university is still a few years off, what can you do now to ensure you’ll have the money when the time comes?

What are the costs?

  • Course fees

Tuition for undergraduate courses costs up to £9,250 per annum for UK students.

Typical undergraduate courses last for three years, meaning that your child could leave university with a debt of around £27,000. This is for course fees alone.

Although it might be tempting to pay the cost of course fees outright if you are able, this might not be the best choice.

The Student Loans Company requires your child to begin paying back their debt in the April after they graduate, but only if they earn more than a threshold amount. For those starting university 1 September 2020, that amount is £26,575.

Even then, your child will only pay a percentage of the amount above this threshold.

Many leaving university won’t have to start paying their debt straight away. Some may never have to pay it off. After thirty years, all remaining debt is wiped clean.

Even if you anticipate your child becoming a high earner straight from university, paying off tuition fees might not be the best decision.

Using the money to increase the deposit on a first house or to clear any other, higher-interest debt, might be much more beneficial in the long term. If no other debt exists, it’s never too early to start saving for the future – or even for retirement – so speak to us if you’re unsure of the best option for you and your child.

  • Accommodation, cost of living

To cover additional costs associated with university life – accommodation, food, books, childcare – full-time students can apply for a repayable maintenance loan. As with the tuition loan, your child will need to pay this back, but only once they are earning above the threshold amount.

Maintenance loans are available to anyone eligible for Student Finance England.

Whereas the loan provider pays tuition fees directly to the university, a maintenance loan is paid directly into your child’s bank.

Maintenance loans for students from England range from £3,410 to £12,010. The sum paid is based on your household income, where your child will be living (on-campus or commuting from home), and whether the university is in London.

If you’ll be covering the cost of your child’s accommodation, you’ll want to consider factors such as:

  • The cost of un-catered student halls
  • The cost of catered halls and the potential saving after a higher initial outlay
  • House and rental prices nearby

According to Times Higher Education, ‘for 2020, average student rent came to £126 per week, or £547 a month,’ rising to £640 a month in London.

‘The average annual cost for students is £4,914 (based on a 39-week contract)’ which means accommodation costs for your child’s three-year degree could cost you around £14,742.

  • Additional expenses

Utility bills are likely to be payable on top of rent and could be around £50 per month. Depending on where your child is studying, a student travel card might also be useful. These are around £45 a month but students at central London universities should expect to spend £23 a week on travel (£140 a month).

Also consider a 16-25 Railcard for your child, allowing them to benefit from one-third off travel on regional trains.

The benefit of advice

The cost of sending a child to university can vary greatly depending on the course, the institution, and its location.

If your child is entering university this year, many of these big decisions will already have been made. But if your child’s entry into further education is still some way off, remember that it’s never too early to start saving for their education.

Whether through a savings account, a specialised product such as a Junior ISA, or your own investments, we can help you to use your money in the best and most tax-efficient way.

By helping you to put a long-term plan in place, we can ensure that all eventualities are covered.

From the complexities of investment to financial basics like budgeting and putting an emergency fund aside, our experience and expertise can help your child through university, into their first house and beyond, while seeing you safely into retirement too.

Get in touch

If you’d like to discuss any aspect of saving for a child or helping a loved one through further education, we are here to help. Please contact us if you have any questions.