92% of graduates interviewed took out a loan to finance their time at university but only 18% expect to repay this in full. Students who anticipate they will be able to repay their loan think it was take an average of 14 years to pay it off.
The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time
And what’s the cost of the debt?
- Students planning to go to university anticipate graduating with a debt of £38,238
- Final year students anticipate their debt will amount to £39,430
- The average parent underestimates their child’s likely debt on graduation at just £23,905
Those are quite considerable figures! Is the ‘bank of mum and dad’ a viable option?
66% of parents are planning to help their children with university costs, but there is a big difference between parents from different social grades:
- 70% of parents from social grades ABC1 plan to contribute
- 53% of parents from social grades C2DE plan to contribute
And how exactly do parents save for their children’s university costs?
- 62% have used cash accounts
- 16% have used investment companies
- 12% have invested in shares
- Investing £25 a month in the average investment company would have grown to £15,003.
- Investing £50 a month in the average investment company would have grown to £30,006.
- Investing £100 a month in the average investment company would have grown to £60,011.
- Investing a lump sum of £5000 would have grown to £31,589.
We offer two Investment Plans that could help your child later in life. The BMO Junior ISA (JISA) allows you to invest u to £9,000 per tax year (2021/22 allowance) without paying tax on income or capital gains. Alternatively, our Junior Investment Account (JIA) has no investment limit but doesn’t offer the same tax-efficient benefits as the Junior ISA. Both plans allow you to tap into the long-term potential of the stock market. Find out more here.
The impact of Covid-19
The pandemic is causing increased uncertainty around university – and not just down to the A-level results mess. 18% of young people aged 16-24 who are not at university and not planning to go cited the virus as a factor influencing their decision . And the most common reason here was concerns over fees due to the financial impact of the pandemic. Meanwhile, 39% of parents stated the pandemic has made it more difficult for them to support their children through university.
Turning to current university students, 82% stated that COVID-19 has made their time at university worse value for money, with the top three reasons for this being:
- Reduced teaching content hours – 68%
- feeling less productive working from home – 49%
- Limited experience of the social aspects of university – 41%
All data according to research from the Association of Investment Companies (AIC) conducted by Opinium. The research was completed by Opinium Research on behalf of the AIC from 7 July to 17 July 2020. The parents research from 7 July to 15 July consisted of 1,001 online interviews with parents whose children have gone / expect to go to university. The student research from 7 July to 16 July 2020 consisted of 1,000 students who are planning to attend university or are currently at university. The graduate research from 7 to 14 July consisted of 205 graduates who have completed their degree in the last 5 years. The research among those who are not at university and do not plan to go from 7 to 17 July consisted of 260 young people.