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AIC student debt research

24 July 2018

Latest research from the AIC reveals parents vastly underestimate amount of student debt.

The latest student debt research from the Association of Investment Companies (AIC) demonstrates that both parents and students are underestimating student debt. Students at university or planning to go to university think they will leave university with an average of £37,935 worth 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.

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. This echoes recent graduates’ feelings, 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 will have cleared 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 gone up as a priority 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 future

When asked the main ways they have ever saved specifically to help towards their children’s future, 66% of parents said they saved via a cash savings account. While cash may still be the preferred choice, this was followed by saving in an investment company (15%), then bonds (12%).

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 saving scheme, 41% of parents said they didn’t know.

Commenting on this year’s results, Annabel Brodie-Smith, Communications Director of the Association of Investment Companies said: “It’s interesting to see that of those students who said their parents contribute to a savings scheme for their future, almost half said this will be used to help buy their first property. However, help towards financing university costs is still viewed as the greatest priority for most students and parents when it comes to being given or giving financial assistance.

“Like last year, parents still underestimate the amount of student debt their children will graduate with but those who have a long time to save towards their children’s futures may want to consider alternative options 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. £50 a month over the past 18 years invested in the average investment company would have grown to £35,125, clearing a significant portion of the estimated student debt of around £50,000. £100 a month would have grown to £70,250, which would clear their student debt and leave some left over to put towards a deposit for their child’s first home.”

Monthly investment in the average investment company (ex VCTs) to 30 June 2018


5 years

10 years

18 years

£25 Regular savings




Sum invested




Overall weighted average investment company (ex VCTs)






5 years

10 years

18 years

£50 Regular savings




Sum invested




Overall weighted average investment company (ex VCTs)






5 years

10 years

18 years

£100 Regular savings




Sum invested




Overall weighted average investment company (ex VCTs)




Source: Morningstar


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  1. Performance data is share price total return to 30 June 2018 based on the last official close price at the month end, on a total return basis. No expenses taken into account. Source: 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 352 members and the industry has total assets of approximately £183 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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Annabel Brodie-Smith
Communications Director
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Elmley de la Cour
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