Two thirds of British parents have embraced austerity by cutting back on their standard of living to pay for their children’s university education, according to a new poll.
The research, from Nationwide FlexStudent, also reveals that many students spend their loans within the first few months on a range of outgoings, from holidays and cars to nights out and new clothes.
The research, which coincides with the roll out of Nationwide’s new FlexStudent current account, highlights that parents quickly find themselves stuck on a strict budget when their child goes to university, with many discretionary outgoings being reined in.
This results in over two thirds (68%) having to make up the shortfall themselves. The top five spends falling by the wayside include:
· savings (34%);
· holidays (29%);
· socialising (25%);
· getting a new car (22%);
· fun expenditures (22%).
Many parents are forced to take more extreme measures to ensure their children benefit from a university education, with nearly one in six respondents (15%) borrowing money or getting in to debt, and one in seven (14%) taking a second job or delaying early retirement (14%).
But with parents estimating the bill for university to be in the region of £2,500 per year, totalling £7,500 for a three-year course per child, it’s perhaps not surprising that cutting basic outgoings is often a foregone conclusion.
While parents are forced to scrimp and save, the poll reveals that students are less willing to sacrifice their lifestyle if they run out of money, with around one in three (30%) going to their parents when they have no money in the first instance, rather than forego nights out (5%), cutting back on what they spend on food (5%), getting a job (9%) or doing more hours at work (11%).
Students polled also admitted to being frivolous with their student loan, with 29 per cent saying they spend it all within a few months of receiving it, and just over one in ten (12%) admitting to spending it in the first month.
More than two thirds (67%) have used it to fund nights out, buy nice clothes (67%), party (31%), go on holiday (30%) and buy a car (9%).
But while undergraduates are having fun, two thirds of students polled (65%) haven’t thought about how to pay off their student debt and nearly one in ten (7%) think they will finish university and walk into a job paying at least £40,000.
To compound the issue, the majority of parents (85%) surveyed admitted that they would give their child money if asked, with over two thirds (68%) saying they wouldn’t ask for it back, one in five (19%) admitting they would give their child money with no questions asked and only 3 per cent saying they wouldn’t give their child money as they want them to be independent.
When asked whether they understand budgeting, nearly seven in ten (68%) students feel they were insufficiently taught about finance and were ill prepared for student life, with nearly a third (31%) saying they taught themselves everything they know about how to manage money.
Dan King, Nationwide’s Head of FlexStudent Current Account, said: “University can be an extremely expensive time for parents and students alike and often parents are expected to cover the shortfall, putting them under increased pressure and resulting in tightening their purse strings. For students to manage their own financial situation effectively, they need to understand how finances work and learn to budget, so they can stand on their own two feet.
“From an educational standpoint it’s vital that students are given guidance before and during university life, that’s why Nationwide, as a mutual, has created a student current account that is simple and flexible to use, with an interest-free and fee-free overdraft that puts the student in control. It also comes with a whole range of interactive education support and tools at www.yourstudentmoney.co.uk, helping to ease the pressure financially for both parents and students.”
Nationwide’s FlexStudent current account, offers a range of benefits including up to £3,000 interest-free overdraft with no fees, one per cent credit interest on balances up to £1,000, exclusive access to FlexGraduate2 and the chance to win £15,000 to share.