Going to university continues to be expensive for new and returning students.
Those who completed their courses in 2020 left with an average debt of £45,0001. Yet the struggle to get by on a monthly basis has become more of a priority recently.
About two thirds of students turn to their parents for assistance topping up their maintenance allowance. The rising price of food, inflation and general uncertainty paints a tough picture for the coming months.
Such issues affect parents too. Alongside providing financial support there are other ways you can help your student offspring get through university.
Are students struggling financially?
Students face growing financial concerns, with more than three quarters worrying about making ends meet – according to the Student Money Survey 2021. Sadly, these worries can significantly impact other aspects of their lives and cause their grades, relationships, physical and mental health to suffer.
The survey also found that even with a means-tested maintenance loan, students generally experience a £340 shortfall each month to meet living costs. Average monthly living costs for students are £810, while the average maintenance loan is only £470 per month. This soon adds up, month-on-month, to create a shortfall stretching into thousands of pounds.
A few essential areas of most students’ monthly living costs are also experiencing fluctuations and uncertainty that could cause further struggles:
- Inflation– UK inflation is currently at 3.2% and expected to rise above 4% and remain there until spring 2022 at least2. For students, this might mean their rent, entertainment and general living costs keep increasing.
- Bills– An unprecedented global increase in fossil fuel costs and price cap changes by Ofgem have led to rising gas and electricity prices3. Students in house shares and rented accommodation where bills aren’t included will likely see these rises affect their living costs.
- Food and drink– Higher prices for food and drink are further increasing the cost of living, which can form a big part of many students’ monthly expenses4.
In the near future, daily, weekly and monthly living costs for students look likely to keep rising, potentially increasing the already high average monthly shortfall.
How are students fighting back?
There are a few common things students are doing to reduce or eliminate any shortfall:
- Part time jobs- On average earning £404 per month5.
- Grants, bursaries and scholarships- For specific degrees, backgrounds and more.
- Side hustles- Two in five students have a side hustle or their own business6.
- Investments- More students are investing in cryptocurrencies than ever7.
- Bank of Mum and Dad- Receiving on average of £120.56 each month8.
But parents also face the same rise in living costs as their student offspring. For those with more than one child currently at university, this can make providing financial support even more challenging.
What can parents do to help?
As a parent, providing financial help where possible to cover any shortfall is the obvious place to start. To try and ensure your children don’t experience further money struggles, educating them about money management can prove invaluable too. Sometimes careful budgeting, following financial advice and your good example is all that’s needed.
Follow Norton Finance’s four golden rules for parents:
1. Create a budget for yourself and your children
Leading by example is one of the best ways to teach your children and instil the importance of budgeting in them. Start by creating a simple budget for your own household, separating into sections for incomings and outgoings each month.
Once your budget is ready, talk them through it and explain how you use it to make sure you don’t overspend. Then encourage them to draw up their own monthly budget planner – hopefully seeing how clear yours is will give them the confidence and drive to do so.
2. Review your spending
If you’re sending financial support to your children at university, include this in your budgeting outgoings. Stay on top of things and ensure your outgoings don’t exceed incomings by regularly reviewing your finances and budget.
Checking everything you’ve spent at least once a month can highlight any areas where you’re regularly over or underspending. Here you can adjust your budget to improve your money management, whether increasing savings or spending on food if prices keep rising.
3. Consider borrowing
Supporting children through university while still running your own household can be tough – especially with price fluctuations that are out of your control. When reviewing your budget, if you find you’re struggling to make ends meet or lack the funds to start/continue supporting your student child, borrowing could be an option.
You could consider fixed term loans – which are cheaper in the long run than credit cards or payday loans – to help cover any shortfall or budget gaps. Make sure you’re able to meet all repayments before agreeing to a loan.
4. Explain the importance of timely repayments
Talk to your children about the impact repaying loans and credit cards on time or late can have on their credit score and future finances. Hopefully this will further drive home the importance of good money management by discussing the potential consequences further down the line.
Check your own credit score and discover how to improve your credit rating as well. This way you can show a good example, while seeing if there are any possible areas for improvement yourself.
For further tips around budgeting and money management, visit the Norton Finance Know How hub.