Teenagers saving to avoid student debt
Many youngsters are saving towards higher education from the age of 11 because they have seen older family members flounder under the burden of university debts, according to research from leading Child Trust Fund provider, The Children’s Mutual.
And with news that 42 per cent of this year’s undergraduates plan to work part-time in a bid to afford higher education and 78 per cent of parents saying they think that the credit crunch will make it harder for them to fund their children through university, The Children’s Mutual is urging the nation to change the way it thinks about funding higher education.
David White, Chief Executive of The Children’s Mutual, said: “It is becoming increasingly apparent that we need a sea change in the way that many parents and their children fund university. For those approaching higher education in the next few years the Government has a clear student finance package in place but for parents of younger children, one way to stave off the financial nightmares of the current university generation could be to start saving now.”
A reversal of the traditional parent-child roles uncovered by The Children’s Mutual reveals that many young people show a better awareness of the need for financial planning than their parents. While nearly a third of youngsters aged 11 to 18 are putting money aside for higher education, a third of parents realised they are not saving enough for their children’s futures.
Mr White said: “It is great to see that today’s teenagers are aware of the costs involved with going to university and are taking steps independently to try and avoid the high levels of debt that are now common amongst graduates. But the average cost of three years at university now sits at £40,400 – a huge amount of money for any teenager to find.”
Currently four times more teenagers are heading to university than 30 years ago, but according to The Children’s Mutual, many young people and their families are only just starting to realise the financial implications of their higher education aspirations. The average graduate leaves university with a £17,500 debt and according to the report, “little hope of paying it off”.
Mr White said: “We would encourage parents and the wider family to consider saving as early as possible to help fund their children’s university aspirations. Since the Child Trust Fund was introduced, many more families than ever before have started saving over the long term and that is a very good thing for the future of this country.”
The report also uncovers that unlike their younger siblings who are saving for the future, many over 18s hadn’t thought it necessary to save for university and think that student debt is “normal” and that “a ‘culture of debt’ (is) accepted as a normal part of life.” This is despite the consensus among these young adults being that “having such large debts from student loans made it easier to fall into further debt.”
The research, commissioned by The Children’s Mutual and compiled by the Social Issues Research Centre (SIRC), further found that young men are more likely than young women to be saving for university (32 per cent versus 28 per cent). NatWest Student Living Index, August 2008
 Association of Investment Companies, 18 July 2008
 Based on the National Union of Students estimate of the average expenditure for the academic year 2007/2008 of £13,140 including tuition fees of £3,070, adjusted for inflation at an assumed rate of 2.5% a year for each of the second and third years of the course. This amount applies to students resident in England and Wales who are studying outside London. Welsh students may be eligible for a grant (September 07).
 ‘Social Trends 36: 2006 Edition’ – Office for National Statistics
 Push.co.uk , August 2007 http://www.independent.co.uk/news/education/education-news/average-student-debt-to-hit-16317500-as-topup-fees-burden-starts-to-bite-461479.html
 Coming of Wage Report