Students are underestimating by half the total debt they will carry when they leave university, suggests research by the AITC.
A study commissioned by the Association of Investment Trust Companies found students estimate their average level of debt at graduation will be £6,199, when it reality the actual figure is more like £13,500, particularly as students now have to pay top-up fees.
Parents estimated the final figure would be around £1,000 more at £7,080 by the end of a three-year term, but this still leaves parents “seriously unprepared for the levels of debt they are likely to be burdened with on graduation”, says the AITC.
Yet at the same time, research based on the performance of investment trusts reveals if a parent saves £50 a month, after 18 years the fund will have raised over £28,000 – an amount which is still £5,000 less than the National Union of Students is predicting it will cost by 2010 to complete a higher education course.
Investment trust performance - share price total return to July 31st, 2006
|Lump sum - £1,000 investment in average investment trust||£1,146||£1,746||£1,518||£2,333||£5,779|
|£50 a month investment in average investment trust||£656||£2,429||£4,601||£10,289||£28,015|
Further analysis of student attitudes reveals just over one in five students (22%) expect their parents to foot their entire university bill, while one in three parents (33%) have resigned themselves to it.
One in five (20%) parents are said to be prepared to sacrifice their annual holiday to help meet university expenses, says the AITC, whilst a further 18% would go without a new car in order to fund their child’s education.
In order to promote the range of investment trust child savings plans available on the market, the AITC has produced a free factsheet detailing all the schemes available to consumers.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Julie Henderson on 020 7968 4571 or email [email protected].IFAonline
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till