A Headstart Uni Smart Shopping
With average student debt at over £44,000, a little homework can save parents and their children a lot of money. Hilary Thomson, co-founder of Headstart Uni, raids her bank of advice
As over 400,000 sets of parents wave their teenagers off to university this autumn, the question of money is likely to be uppermost in their minds.
Many parents, having cheerfully assumed that their child could ‘borrow it all’, will have been unprepared for the contribution they are expected to make. Moreover, a high percentage of teenagers, unused to money management, are likely to overspend.
Fortunately, an overview of financial facts and timelines can help both parent and child to budget sensibly and avoid unnecessary debt.
Decisions affecting the cost of university education are made earlier than you might think
In fact, they begin the moment your child starts considering his or her choice of university and course – usually at the beginning of Year 12. That it is cheaper to live in Liverpool than Bristol comes as no surprise, but make sure that you discuss accommodation too.At Southampton University, for example, the cost of self-catering accommodation for 2014/15 varies from £85.89 to £254.80 per week. You could also find out whether the course attracts any bursaries. Check out the National Scholarship Programme (thecompleteuniversityguide.co.uk) and individual university websites for details.
Your child’s student loan may not even cover the basics
The tuition fee loan of up to £9,000 a year is not means tested and is paid straight to the university. But the maximum £7,249 package of maintenance loan (for accommodation fees/rent) and non-repayable maintenance grant (for all other living expenses) is usually reserved for children from homes where combined household income is £25,000 or less. If you have a combined income of £50,000, for example – hardly a bonanza in the South-East – your child is likely to be offered a loan of £4,836 only, with no maintenance grant. This leaves you to find £100+ per week for the shortfall. Consider paying it weekly by standing order, so your child can’t spend a term’s money in the first few weeks.
Students spend more than they should
Surprise! Research from Santander (Sept 2013) found that students spend, on average, £8,681 on accommodation and living costs per year: over £1,400 more than the maximum student finance package. So sit down with your child, work out a realistic weekly budget and stress the importance of sensible spending limits.
Be prepared to pay up, however, if your child runs short. Failure to pay accommodation fees, for example, can result in his or her having to quit the course.
Student houses/flats are not the cheap option they used to be
University town landlords usually charge full rent throughout the vacations, and you may find your child asking you for a £3-400 deposit on their second year accommodation just a few weeks into their first term.
As guarantor, you are liable for your child’s whole year of rent (and often the rent of any flatmates who default). So be prepared to challenge your child’s choice of second year accommodation. A well-insulated terrace within walking distance of the campus can end up costing far less than a draughty ‘bargain’ mansion in the outer suburbs.
Your teenager will be offered a credit card and an overdraft even though he or she has no income
Student bank accounts routinely offer new undergraduates the option of a £500 limit credit card and a £1,000 overdraft. You may suggest refusal, but children over 18 are entitled to do as they wish. Ask to see bank statements at the end of the first term. Your child will probably resent this, but if spending is running out of control, it gives you time to work out where the money is going.
Your child may not be the thrifty shopper you had believed
Teenagers adept at bargain-hunting for fashion online can be surprisingly at sea in a supermarket. They are impressed by brand names, offers, the new and the novel – all of which means inflated bills.Any effort you make at teaching them to shop wisely and cook a range of thrifty, nutritious meals, therefore, will be handsomely repaid. The only question is whether you have the time…
Headstart Uni provides the following services: – workshops for parents and schools about the student loan system and the costs of university education – workshops for teenagers about understanding money, budgeting, credit, smart shopping, the Ten Meal Trick and finding vacation work – help with personal statements and university applications (both in the UK and abroad) For further information visit: headstartuni.co.uk
