How parents can help fund their child’s university education

Empowering your children to manage their money is one of the most important skills they could be taught

(Rex Features)

Given most of today’s graduates are destined to be paying off their tuition fees well into their 50s, the choice students make now could shape, not only their own personal finances dramatically, but their parents’ too, and for decades to come.

So, if you’re a parent and feel like sending your child off into higher education is the right decision, here are the three key ways you can help out with funding the costs associated with university:

1) Research how you are going to pay for it

The key thing here is to have a frank conversation with your child about who will foot the bill. Saving in advance is a must for any potential student, and their parents. Even if your son or daughter is heading off to university in just a few months, it’s never too late to start putting money aside, especially as the first few months can be some of the most expensive.

Thankfully, savings interest will be paid tax free from April 6, so you’ll get a slightly better return. But, high interest currents accounts can boost your returns further.Checking each university’s website for grants and bursaries and applying for any that your child is eligible for is a good way of reducing costs. Refer to this guide for information on grants and funding for disabled students.

If your family income is below £42,620 for the 2015/16 academic year, your child can apply for government support. Investigating and applying for scholarships and sponsorships is also very worthwhile, as you could end up saving a very significant amount.

2) Sort out a student loan

Gov.uk has an abundance of information about applying for student loans but, to give you an idea, your child will generally take out a tuition fee loan and a maintenance loan. The tuition fee loan - of up to £9,000 - is paid directly to the university to cover the annual costs of tuition fees, so your son or daughter will never get their hands on it.

Maintenance loans, on the other hand, are means tested and designed to help cover the costs of living while studying, and the amount your child will be eligible for depends on your household income and where your child will be living during their studies. In 2016/17, the maximum maintenance loan available to students are as follows:

• £6,904 for students living at home while studying
• £8,200 for students living outside of London and away from home
• £10,702 for students living in London and away from home
• £9,391 for students living or studying abroad for at least one term

While a student loan is likely to be one of the cheapest ways of borrowing money, it’s worth remembering that the loan will still have to be repaid once your child starts working and is earning enough to pay it back.

3) Budget your way forward

Empower your children by showing them how to budget and manage their money. This is seldom taught, but knowing how to budget properly is possibly one of the most important skills you could ever teach your kids.

Take this one step further by cutting your costs in other areas so you can save more towards their university fund. Your utility bills, insurance, and mortgage deals are all areas you might find you could save hundreds, potentially even thousands of pounds a year, simply by reviewing.

Teach your child to make smart financial decisions too by helping them to understand when to borrow and when not to. By doing so, you could set them in good stead for a secure financial future, whether they go to university or not.

For more information on how to afford to send your child to university, read this guide.

Hannah Maundrell is editor-in-chief at money.co.uk and a leading personal finance expert also