Going into higher education is a costly business, so it's important to face up to financial realities.
A-level results this week will have opened the door - or at least clarified where the door is - for hundreds of thousands of prospective freshers. A new life awaits them as they set off to universities and colleges across the UK. For many, this will be the first time they have ever had to take care of themselves.

But the realities of student life aren't always apparent till a student has experienced life away from home. Many celebrating sixth formers this week are seriously underestimating the costs of higher education and the student life, and are prime candidates for the debt trap. But it is parents who are likely to foot the bill.

Except for the disabled, those with dependents, those leaving care and others in exceptional situations, grants for students have been abolished. Most new students must now rely on the Student Loans Company for loans to cover living expenses, and nearly 90 per cent of sixth formers expect to have to take up part-time work to cover their costs.

But for a third of new students this autumn, it will be parents who will provide much of their cash. Most parents want to support their kids at college, but this places an added burden of responsibility on students who can't afford to go mad for fear of damaging their parents finances.

Which is why it is so vital for parents and new students to work out financial realities now, before it is too late. And judging by a Natwest Bank survey published last Monday, Student Money Matters 98/99, the sooner parents open their children's eyes the better! The survey of 549 sixth form students showed, for example, that on average they expected to pay just pounds 97 a month in rent. But even in cheap cities such as Liverpool, expect to pay over pounds 130 a month minimum. Students average rent this year is pounds 76 a month more than the sixth formers guessed at - this would be pounds 900 extra a year, and spells severe money worries.

Planning a realistic budget is one of the most important things parents can do for their university-bound children, says Andrew Thomas, student services manager at Natwest. "We recommend parents and students look at how much their halls of residence or room is going to cost, then at how much they have to spend each week. We then advise that all the student discounts that are going, are made use of."

The attitude of the banks is that they want to help students manage what they receive, rather than providing specific assistance to parents to help their offspring through college. Mr Thomas says: "We look to help the student with what they have. If parents are funding their children entirely, then obviously we will discuss the best way of managing their finances.

"We'd recommend they provide small amounts of money on a very regular basis, rather than give their kids a large lump sum at the start of term which is likely to run out before the end. The key is effective budgeting, but if parents' circumstances change, then we will provide guidance."

Marie and John Kerwin saw their daughter Jane start a fashion promotion degree at the University of Central Lancashire last year. The year has cost them a minimum of pounds 4,700, but on top of that, Jane has taken out a student loan of pounds 2,500 and works a few shifts a week in a student pub.

"I'm happy to spend the money," says Mrs Kerwin. "The course and the experience of higher education are worth it. Jane has worked really hard for this, and, as she has problems with dyslexia, we don't want her to have to cope with financial pressures as well."

Jane has felt under some obligation to do well on her course as a repayment for her parents' investment - and their faith. To an extent, this can only be a good thing. The stereotypical student lounging around week after week during term, spending his or her grant on beer, is getting more and more outdated, and there is a real motivation to work hard now.

But parents should not use the fact that they are supporting their children financially as a stick to beat them with. Many students would rather they had the independence they crave, which is not fostered when parents send a cheque in the post every month, and then demand to look at bank statements to see that their money is not being squandered.

If you are supporting your child financially, then you must trust them to spend the money as if it is theirs and theirs alone. You may worry that they will be spending it on all sorts of pointless things, but they are more likely to be worried about making sure they don't let you down.

Parental financial support for students is now a reality for two-thirds of new freshers, and is likely to increase. Unless you are one of the few who set up a college fund to invest in at the birth of your children, it is now time to get your kids to face financial realities.

But remember, university or college is one of the greatest investments you can make for your kids.


Students should apply to their LEA for financial support as soon as possible after receiving a provisional offer of a university place.

One means-test will assess how much a student and their family should contribute towards the cost of their university education.

Where parental residual income is pounds 17,370 or less, students do not pay any fees, and their parents are expected to pay nothing towards their maintenance.

Students whose parental income is pounds 27,800 or more, pay full fees.

Above that level, students lose up to 25 per cent of the maximum loan entitlement, and their parents are expected to contribute towards their living costs at university or college.

At pounds 30,000, parents are expected to pay pounds 239 a year in maintenance and the maximum loan falls to pounds 3,396.

At pounds 35,522 or more, parents are expected to contribute pounds 910 and the maximum loan falls to pounds 2,725.

Universities make their own arrangements for the payment of fees, but most are flexible and accept instalments.

Student Loans

These are a major source of student income. The maximum loan figures for the year 1999/2000 are:

For students living away from their parents home while studying:

Full year Final year

...in London pounds 4,480 pounds 3,885

...elsewhere pounds 3,635 pounds 3,150

For students living at parents' home (London or elsewhere)

Full year Final year

pounds 2,875 pounds 2,510

Useful contacts

Student Loans Company: 0141-306 2000

A DfEE helpline on student support will run for three weeks from 19 August on 0800-731 9133

Chris Brown