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How Much Money Should Parents Spend on University Education?

25May
How Much Money Should Parents Spend on University Education? Posted by: Jessica Rodz
How Much Money Should Parents Spend on University Education

The UK government has incorporated “parental contribution” as part of university student finances. Also, the burden of the maintenance loan and tuition loan falls on the undergraduate or postgraduate student.

 

A student must start payments after finishing or leaving a course and accruing a specific amount as income. The tuition fees loan helps to make a direct contribution towards the university’s tuition fees.

 

Meanwhile, the maintenance loan helps to recover costs, excluding the tuition fees. These include food, accommodation, travel, course-related payments, etc. The amount is directly submitted to the student’s bank account.

 

Moreover, the amount of maintenance loan depends on parental income, plan for living, and studying. Additionally, the student must cover the maintenance loan shortfalls with a scholarship, savings, part-time work, and parental bank accounts.

Parental Expenditure for a Child’s University Education

●    Living Costs

 

Students continuously incur the cost of living even while staying with their parents. However, the parental contribution depends on the accommodation expenses, food, insurance, laundry, and course material.

 

Moreover, once the lockdown is lifted, students might want to engage in outdoor parties, groups, meetings, seminars, etc. So, the costs might even include society fees, university club membership, and costs of going to social events.

 

Besides this, university students often incur costs of clothing, haircut, mobile phones, and traveling. Moreover, an average university student has to pay a tuition fee of £9,000. Therefore, availing of student loans becomes crucial, especially if the parents have a low income.

 

However, four different student loan plans are mentioned for England, Northern Ireland, Scotland, and Wales. Besides this, students and parents know their loan plans before making repayments.

 

According to a source, the cost of living for three-year undergraduate students in the UK is £14,742. However, another source specifies that the monthly living cost is £795. The report even suggests that fifty-five percent of students find a maintenance loan of £572 per month insufficient for covering expenses.

 

The funding through maintenance loans falls short of £223 out of the living costs of £795. Rent and groceries accrue the largest expenses. Students have to often cover weekly groceries with a minimum expenditure of £23.

 

The survey suggested that sixty-eight percent receive £131.31 as extra funds from parents for covering living costs. These borrowers include the growing part-time jobs students that rose from sixty-seven to seventy-four between 2019 and 2020.

●    Parental Contribution

 

According to a source, a parental contribution for students living at home in England would vary between zero and £0 to £4,471. The contribution depends entirely on family income and student loan contribution. It ranges from less than £25,000 to more than £58,220.

 

Similarly, students away from home and outside of London would receive a maximum contribution of £5,066. The maximum amount applies if the household income is more than £62,286.

 

Students staying away from home but studying in London can receive £6,216 if the household income is greater than £70,004. The contribution significantly varies for Wales, Scotland, and Northern Ireland.

 

While searching for how to apply for student loans? parents and students should also check eligible grants.

 

The contribution depends on factors like family income, bursary, and student loans for continuing and new Scottish students. The loan and grant for a student with less than £21,000 family income, £2,000 bursary, and £5,750 is £7,750.

 

The loan and grant for a student with more than £34,000 family income, no bursary, and £4,750 are £4,750. So, the parental contribution for such a Scotland student is £3,000. In Northern Ireland, the full grant and loan amount is £5,338.

 

Therefore, students staying at home are eligible for zero to £1,588. The minimum household salary is less than £19,203, a grant is £3,475, a loan is £1,863, and award is £5,388. The maximum contribution of £1,588 is for students with a household income of more than £41,540.

 

Such students are eligible for zero grants and £3,750 as an award and loan. Similarly, Northern Ireland students living outside of London and away from home are eligible for the same maximum contribution.

 

Northern Ireland students under this category have a maximum eligible grant and loan of £6,428. Likewise, away from home but inside London, Northern Ireland, students become eligible for a maximum grant and loan of £8,368.

 

Meanwhile, Wales students receive a maximum contribution irrespective of household income and based on place of living. Students staying at home receive £8,790 yearly. On the other hand, students away from home and outside of London receive £10,350 every year.

 

Likewise, students living away from home but inside of London receive £12,930 per year. Therefore, parental contribution depends on many factors. So parents should consider it as a crucial part before making any financial decisions.

●    Budgeting

 

University students can easily calculate the receivable funds through maintenance loans and the monthly expenditure. These help to learn about the deficit and create a budget for managing costs.

 

Moreover, students should become prepared for clearing maintenance loans in three large installments. The budgeting practices would also help to set up weekly and monthly allowances. Hence, it will help to take control over cash.

 

Besides this, budgeting practices would help to make advance plans for upcoming expenditures. It will also build a habit of regularly checking bank account and avoid fraudulent activities.

 

Students can cut down on outdoor food expenses by learning to cook meals and packing lunches. It will also help to improve overall health. Additionally, it would put less strain on the bank balance.

 

Parents should also help their university-going child set up a savings account that offers competitive interest-free overdrafts. Besides this, student discounts can help avail benefits of products and services at lower prices and save money.

 

Additionally, university students should learn some of the basic budgeting tips. These include finding competitive markets, making advance trip bookings, using budgeting apps, avail coupons, and deals, etc. Student loan repayment becomes easier with such budgeting tips.

 

●    Shortfalls

 

As clarified earlier, university students often face shortfalls. Therefore, covering the expenses becomes a challenge. However, if parents have sufficient funding, they can offer to help their children.

 

Alternately, students can take part-time jobs at a university that provides minimum wages but offers field exposure. Similarly, students can take part-time jobs outside the campus. These may not offer the relevant experience; however, they help with the current financial circumstance.

 

Under any circumstance, an experienced candidate is more welcomed at a firm after graduation compared to others. Presently, the work experiences would demand completing tasks remotely. However, post-pandemic, a low of new job opportunities would open up for students.

 

Besides this, a child can also become eligible for a bursary or scholarship. As a result, he or she could receive the funding for covering university expenses and may accrue minimum living costs. Moreover, students can apply for funds through many educational trusts and charities.

 

Students that don’t qualify for both and have parents that don’t have sufficient funds should apply for a credit card. A promotional card would help to cover expenses without accruing an additional interest rate.

 

Optionally, taking an interest-free overdraft can help to recover costs. However, students must follow budgeting practices to recover the credit card expenses and avoid landing in a debt cycle.

 

Parents should worry about what happens if you don’t pay student loans the UK?“. The student would incur a high-interest rate and face problems breaking the debt cycle. It is crucial to avoid unnecessary costs by making repayments by earning and opening a savings account.

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