Parents dig deep to support kids through university
And now the Bank of Grandma and Grandad is chipping in too.
Parents and grandparents are making generous contributions to help their children through university, according to research from the Association of Investment Companies (AIC).
About seven in ten parents (71%) contribute financially to help their children through university, or plan to. The average contribution is £8,723 a year, according to the research conducted by Opinium among parents whose children are at university, or planning to go1.
The gap between more and less affluent parents has widened in recent years, with 76% of parents from ABC1 social backgrounds contributing or planning to contribute, compared to 59% of C2DE parents. ABC1 parents contribute £9,626 on average, compared to £5,639 for C2DE parents2.
A quarter of parents (25%) say that grandparents are also contributing to their children’s education. The average yearly amount contributed by those grandparents is £4,703, up from £2,455 in 2013 when the research began. If this amount had grown only by inflation, it would be just £3,337, indicating that grandparents’ contributions have grown substantially ahead of inflation over this time.
“An investment of £50 a month in the average investment trust over the past 18 years would have left investors with £30,668 – comfortably covering what the typical parent contributes over three years of university.”
Nick Britton, Research Director at the Association of Investment Companies (AIC)
Source: AIC/Opinium (average grandparent contribution among those who do contribute; inflation = CPI)
University is still parents’ greatest financial priority when it comes to helping their children out. Nearly half (46%) of respondents prioritise university costs, with 33% saying a first property is the highest priority, and 10% a car. Among students3, the results are similar, with 46% saying university costs are the highest priority when it comes to help from their parents, 28% a first property, and 14% a car.
Parents are relying on savings to help with university costs. About half (49%) of parents who are contributing financially to the costs of their children’s further education will use some of their cash savings, while a further 16% will use all or most of their cash savings.
Cash remains the most popular way to save for children, used by nearly two-thirds (64%) of respondents, while much smaller numbers have used investment trusts (16%), shares (15%) or funds (10%).
When asked why they don’t use the stock market to save for their children, parents say there is too much risk of losing money (37%), they don’t have enough money to invest (28%), they don’t understand how to invest in the stock market (21%) or they just haven’t thought about it (21%).
Despite this, a majority of parents (52%) think that an investment in the stock market would deliver better returns than cash over a typical ten-year period – though 26% think cash would do better and 23% are unsure.
The average investment trust has returned £2,708 for every £1,000 invested over the past ten years, compared to £1,064 for the average savings account4.
Nick Britton, Research Director at the Association of Investment Companies (AIC), said: “Millions of parents make big financial sacrifices to send their children to university, and our research shows that many grandparents are digging deep too. So it’s worrying that more parents aren’t using the power of the stock market to help boost their savings over the long term.
“Of course, not everyone can afford to put money aside, but those who can usually use cash savings accounts rather than the stock market. That’s despite the fact that most parents recognise an investment in the stock market will do better than cash over a typical ten-year period.
“While there are many ways to invest in the stock market, investment trusts provide diversified, professionally managed exposure to a range of investments and can be a good starting point for investors. An investment of £50 a month in the average investment trust over the past 18 years would have left investors with £30,668 – comfortably covering what the typical parent contributes over three years of university.”
Returns from investing £50 a month in the average investment trust
5 years | 10 years | 18 years | |
|---|---|---|---|
| Total sum invested | £3,000 | £6,000 | £10,800 |
| Value at end of period | £3,752 | £9,713 | £30,519 |
Source: theaic.co.uk / Morningstar.
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Notes to editors
1. The research was commissioned by the AIC and conducted by Opinium. The parents survey polled 1,000 UK adults with children aged 13 to 21 who have a child at university or expect to have a child at university. The fieldwork was conducted between 5 June and 17 June 2024.
2.The table below tracks the widening gap between ABC1 and C2DE parents in their financial contributions to support their children through university.
2022 | 2023 | 2024 | |
|---|---|---|---|
|
|
| |
| % of parents contributing/planning to contribute to help children finance university |
|
|
|
| All parents | 69% | 72% | 71% |
| ABC1 parents | 71% | 75% | 76% |
| C2DE parents | 62% | 63% | 59% |
| Difference* | 10% | 12% | 16% |
|
|
| |
| Average annual contribution among parents who contribute/ plan to contribute |
|
|
|
| All parents | £9,025 | £8,631 | £8,723 |
| ABC1 parents | £9,739 | £9,389 | £9,626 |
| C2DE parents | £6,379 | £5,860 | £5,639 |
| Difference* | £3,360 | £3,528 | £3,988 |
* Calculated using unrounded figures.
3. In the students survey, Opinium polled 1,000 students who are planning to attend university, or are currently at university. The sample was weighted to match previous years’ waves by age, gender, social grade and student status. The fieldwork was conducted between 31 May and 10 June 2024.
4. Source: theaic.co.uk / Morningstar. Returns to 30/06/24. Returns for the average investment trust are share price total returns excluding VCTs. Returns for cash savings accounts are based on the Morningstar UK Savings 25000+ Invt NR index, which tracks the returns of savings accounts for savers with at least £25,000 invested.
5. The Association of Investment Companies (AIC) represents a broad range of investment trusts and VCTs, collectively known as investment companies. The AIC’s vision is for closed-ended investment companies to be understood and considered by every investor. The AIC has 329 members and the industry has total assets of approximately £277 billion.
6. For more information about the AIC and investment trusts, visit the AIC’s website.
7. 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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