Planning early is essential, as it gives you time to build a big enough savings pot to help with tuition fees and living costs. But experts are warning that older family members must protect their own financial position as well as helping younger people get on. Otherwise their own future could be at stake.
Older family members are more generous than ever. Dan Coatsworth, head of markets at AJ Bell, said more than half of parents with children under 18 had saved or invested to help fund university or college costs. The average parent who is currently saving for university is putting away around £125 a month, Coatsworth said. “Higher education doesn’t come cheap. It is no surprise many parents want to earmark money to support their children.”
The maximum tuition fee for a standard full-time course in England is now £9,790 a year, meaning three years of tuition alone could cost almost £29,400 before living costs. Government figures put the average student loan balance for a higher education borrower entering repayment at £47,730 for 2025/26.
Coatsworth said that among those who save, the average savings pot for university or college costs is currently worth £7,500. That’s a huge help but still well short of what’s required. Cash savings remain the most popular option, but Coatsworth said equities make money work harder over periods of at least five years and longer.
AJ Bell calculates that £50 a month invested in global stock market tracker Vanguard FTSE All World Exchange Traded Fund (ETF) at birth would be worth £21,976 today, 18 years on. In cash, it would have grown to a more modest £12,501.
Families can invest up to £9,000 a year either in shares or cash via a Junior ISA, with all returns tax free. The money belongs to the child from age 18 and cannot be withdrawn by the parent.
However, retirement specialists at Standard Life are warning parents against raiding their pensions to spare their children student debt.
Its analysis found that a 55-year-old withdrawing £90,000 from their pension to cover the headline cost of a three-year degree could have £119,000 less in their retirement pot by age 68. Which could spell disaster.
Neil Jones, tax and estate planning specialist at Standard Life, said withdrawing money from pensions means missing out on future investment growth. “Supporting children through university can be incredibly rewarding, but it’s important that parents also consider the impact on their own financial future too.”
