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A-Level results day approaches and parents vastly underestimate student debt

13 August 2018

Cash is king for parents wanting to help save towards their children’s futures.

On Thursday 16 August, teenagers around the country will get their A-Level results and those hoping to go to university will find out whether they have the grades they need. Whilst it’s an exciting time of opportunities and new beginnings, latest research from the Association of Investment Companies (AIC) shows that both parents and students are underestimating student debt.

Students at university or planning to go think they will graduate with an average £37,935 of debt. Parents, on the other hand, vastly underestimated this figure and said, on average, they’d expect their children to leave university with £23,954 of student debt. Both estimates are lower than that of the Institute for Fiscal Studies, which last year forecast that student debt would rise to over £50,000.

Although help with university costs remains the top priority for parents (48%) and students (43%), students are increasingly concerned about getting on the housing ladder. This year the key financial priority for 38% of students was help towards buying a first property, a 5-percentage point increase on 2017 (33%). In contrast, for parents, help towards buying a first property is less important than it was last year, with 34% rating it their top financial priority in comparison to 38% in 2017.

Commenting on this year’s results, Annabel Brodie-Smith, Communications Director of the Association of Investment Companies said: “As thousands of young people find out if their A-Level grades will help them take the next step to university, parents of younger children could be thinking about ways that they can save to help their children with further education costs. Help towards financing university costs is still viewed as the greatest priority for most students and parents above saving for a first property.

“Nevertheless, parents are underestimating the amount of student debt their children will graduate with. Those who have a long time to save towards their children’s futures may want to consider alternatives to cash to try and get the most from their savings. Interest rates are still near record lows and this will have had a significant impact on cash savings. Parents may want to consider investing part of their savings in the stock market for long-term growth opportunities. Investing £50 a month over the past 18 years in the average investment company would have grown to over £35,000, clearing a significant portion of the estimated student debt of around £50,000. £100 a month would have grown to nearly £71,000, which would clear the student debt and leave some left over for a deposit for their child’s first home.”

A lifelong commitment

Based on expectations of having an average of almost £38,000 of student debt, 42% of students that are expecting to leave university with debt felt that it will take them more than 20 years to repay it once they’ve graduated. Recent graduates think it will take longer, with 55% of those that left with student debt saying they think it will take them more than 20 years to repay it. 88% of these said they will be paying off their debt fully themselves and 41% of those think they’ll be aged 50 or older by the time they clear all their student debt.

Despite the costs involved, 61% of students said they never considered not going to university.

Help buying a first property or help financing university?

The greatest financial priority for students was help towards financing university costs (43%) but this had decreased from last year’s survey when 47% of students were of this opinion. Help towards buying a first property on the other hand, has increased as a financial priority with 38% of students rating it their top priority for financial assistance in comparison to 33% in 2017.

Interestingly, of the students who said their family contributed to a savings scheme for their future (32%), 46% stated that this will be used for buying their first property, 27% said it will be used for university costs, and 17% said they weren’t sure what it would be used for yet.

While help towards buying a first property has risen up the priority list for students, the survey revealed that 48% of parents think help towards university costs is the greatest financial priority to assist their child with. This is up 5 percentage points on last year’s survey (43%). Help towards buying a first property is the top priority for 34% of parents, but this is slightly down on last year’s 38%.

Financing university

Understandably, student loans are a popular option amongst both students and parents. 85% of students say they either have or are planning to take out a student loan to help finance university, while 73% of parents expect their children to take out a student loan.

Nevertheless, 65% of students think it is realistic that their family will be able to help them financially whilst they’re at university and 62% of parents said they were currently contributing or planning to contribute financially to help their child finance university. 17% of those parents that contribute or plan to contribute financially stated that they would be using all or most of their cash savings.

Saving for their children’s futures

When asked the main ways they have saved specifically to help towards their children’s futures, 66% of parents said they saved via a cash savings account. In contrast, only 15% made investments.

Interestingly, 46% of students said their parents don’t contribute to a savings or investment scheme to save for their future. When asked to estimate the minimum monthly amount that can be invested in a stock market linked savings scheme, 41% of parents said they didn’t know.

Monthly investment in the average investment company (ex VCTs) to 31 July 2018

£25 Regular savings

5 years

10 years

18 years

Sum invested




Overall weighted average investment company (ex VCTs)





£50 Regular savings

5 years

10 years

18 years

Sum invested




Overall weighted average investment company (ex VCTs)





£100 Regular savings

5 years

10 years

18 years

Sum invested




Overall weighted average investment company (ex VCTs)




Source: AIC/Morningstar.


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  1. Performance data is share price total return to 31 July 2018 based on the last official close price at the month end, on a total return basis. No expenses taken into account. Source: AIC/Morningstar.
  2. The parents research was conducted by Opinium between the 21 and 28 June 2018 amongst 1,002 individuals with children aged 13 – 21 who have/expect their child to go to university.
  3. The students research was conducted by Opinium between the 21 and 28 June 2018 amongst 1,001 UK full time students planning on going/currently at university.
  4. The graduates research was conducted by Opinium between the 3 and 5 July 2018 amongst 213 UK graduates who have completed their degree within the last five years.
  5. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs.  The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 354 members and the industry has total assets of approximately £187 billion.
  6. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance.  The value of investment company shares, and the income from them, can fall as well as rise.  You may not get back the full amount invested and, in some cases, nothing at all.


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Media enquiries

Annabel Brodie-Smith
Communications Director
Tel: 020 7282 5580

Elmley de la Cour
Communications Manager
Tel: 020 7282 5583

William Sanderson
Communications Executive
Tel: 020 7282 5584