Is it time for the Bank of Mum and Dad? Finance tips for university students and parents

Between pricey accommodation and a long list of lectures, university expenses add up – and quick. Whilst investing in your future is exciting, it can be equally as daunting. 

Whether you plan to finance your education or get a helping hand from the Bank of Mum and Dad, there’s a lot of information to take in. Not sure where to start? We’ve rounded up the need-to-know-now student finance tips – for parents and students. 

For parents

The bottom line

UK universities can charge up to £9,250 in tuition fees – though some charge less, so make sure you check. Living costs are location-dependent; most universities offer an estimate of what students will need.

A Student Finance loan is your friend

All UK students can get full tuition-fee loans from Student Finance, but maintenance loans to cover living costs and accommodation depend on household income, where you study and how long for; the calculator at gov.uk/student-finance-calculator will help you work out what you’re eligible for.

Before you jump to pay anything upfront, remember that student debt won’t affect your child’s credit rating and is wiped after 30 years. Your child will only have to repay a percentage of what they earn over a certain threshold, so if you’re not sure they will be a high earner for most of their career, a Student Finance loan could save you both money. 

“If your household has experienced a loss of income due to the pandemic, you could be entitled to receive a higher Maintenance Loan,” says Dr Dominique Thompson, a GP and young people’s mental health expert who teamed up with student accommodation platform, Mystudenthalls.com, to launch a student well-being guide.

Check out gov.uk/repaying-your-student-loan for details.

Think outside the box

Student Finance is the main source of university funding, but there’s a whole world of scholarships and bursaries out there if you know where to look. “There are also thousands of overlooked grants, bursaries and scholarships made available to students which are offered by universities, private companies, and charities every year. Unlike loans, most of these funds don’t need to be paid back. Do your research and check in with your university to see what may be available,” says Dr Thompson.

The Scholarship Hub is a good place to start: thescholarshiphub.org.uk.

Decide what you can give

Even with all the support available many students still end up looking to their families for help. Sit down with your child and work out a budget. Once you can see what loans and scholarships won’t cover, you can discuss how you might chip in.

Money management 101

University may be the first time your child has managed their own money. Take your child to a food shop to give them an idea of how much things cost and train them to be savvy shoppers. “A cooking rota is a great way to save money and reduce food waste with one person nominated to cook a meal for the household each week. Students tend to spend lots of their loans on takeaways and this method ensures healthy home cooked meals each day – with a much healthier price tag too,” says UK director of money saving website TopCashback Adam Bullock.

Don’t forget to impart your money saving hacks. “When it comes to the actual food shop, avoid impulse shopping by writing a list and sticking to it. However, it’s always worth visiting the discount aisle at the end of the day. Yellow stickered meat and seafood can be frozen down and used at a later date,” Bullock adds as food shop suggestions. 

For students

Don’t dread student debt

Remember: no amount of student debt will prevent you from taking out another loan, credit card or mortgage once you graduate. You’ll never be asked to repay more than you can.

Do some research

There’s no better way to learn how to do something than receiving advice from the people who came before you. Podcasts, blogs and social media is a great place to start. Asset management company Schroders Personal Wealth (SPW) joined forces with Heriot-Watt University to produce a podcast series to help students take control of their finances. “We hope this podcast series will be the first of many and will play a part in helping to educate everyone, not just students, and give them the confidence to fully engage with their financial lives,” says Donald Gateley, Regional Director of Scotland & Northern Ireland at SPW.

Additionally, if you run into trouble, speak to your university. “Universities across the UK have been allocated funding for student hardship and mental health support and these grants are available directly through your university. Search for ‘student funding’ on your university’s website,” says Dr Thompson. 

And, avoid ‘pay later’ schemes. “These are all too often a short term fix that can negatively impact in the long run. Missing payments on ‘pay later’ schemes may negatively affect your credit score and put you at risk of being contacted by debt collection agencies, which will worsen any financial situation. They are a ‘slippery slope’ to avoid at all costs,” Dr Thompson adds. 

Be a part-timer

If you plan to work part-time, get your CV ready to go for when you move to university, and hand it out copiously in your first week. If you’ve already got a job at a big chain, ask your boss if you can transfer to a branch near uni. “Working part-time or freelancing will simultaneously help balance finances in the moment, and potentially help for future job prospects too,” says Bullock.

“With a wealth of websites that cater to remote working now, job opportunities are no longer confined to a university city. The likes of [online talent platforms] UniBeez and Fiverr make earning a bit of extra cash simple and are Covid safe too.”

Don’t wing it – budget

The digital financial advice company for students Blackbullion commissioned research into how financial wellbeing impacts students. It found that 75% of students surveyed worry about finances, with 67% saying financial anxiety negatively impacts their mental health. 

One way to alleviate financial stress is to figure out your income (from loans, savings and parents) and outgoings (travel and living costs) and, hey presto, you have a budget. Stick to it by kicking expensive habits like a daily coffee and stashing some money away. Experts at student discount website Student Beans suggest adopting the 50/30/20 rule, an easy way to budget money – 50% of your income should go towards necessities, 30% on discretionary and leisure, and at least 20% should go towards savings.

Bank better

When looking for a student bank account, don’t be distracted by offers of shopping vouchers and freebies.  “When choosing an account, check what each bank is offering specifically and decide if it’s right for you,” says Anthony Morrow, co-founder of financial advice service OpenMoney. “While an interest-free overdraft is a great idea for example, it’s important to remember that it is not simply free money, and you will need to have a wider plan in place for repayments. The aim should always be to pay things off before the interest kicks in.”

Bullock also suggests downloading specific banking apps like Splitwise, Monzo and Yolt which can allow students to allocate bills, rent and maintenance into different areas, leaving little space for overspending or necessitating overdraft spending. “It is smart for students to start budgeting well at university as it will help to pave the way to a financially stable future even if that means a few sacrifices along the way.”  

Also consider opening a savings account. “Saving young is key, so it’s important to be mindful of what you can do to make your money work smarter,” says Jessica Pinkett, Head of Youth Insights at Student Beans.