Students are underestimating the level of debt they will leave university with, according to the publication of a recent report.
Released today, findings from the Association of Investment Companies (AIC) indicates that prospective undergraduates believe they are set to owe less than 8,000 pounds after completing higher education, with parents estimating this figure to be around the 10,000 pounds mark. However, as the firm revealed the actual level of post-graduation debt is 13,252 pounds, both students and parents alike were warned that they could face a "painful shortfall", which consequently could impact upon their finances and ability to make loan repayments in later life. Despite the potential underestimations, both parents and students believe that university debt is increasing with each group reporting that the money now owed after university has increased by 2,975 and 1,679 pounds respectively since the 2006 study.
Commenting on the research, Daniel Godfrey, director general for AIC, said: "Whilst it's important to remember the many positives of a university education, it is a concern that so many parents and students still underestimate the true level of graduate debt. Unless parents and students start to really comprehend the financial implications of going to university, the shortfalls faced by tomorrow's students could put them in serious financial difficulties right at the start of their working lives".
The study also indicated that to avoid debt management problems in later life, a third of prospective undergraduates are set to live away from home in order to save money, a move which according to AIC is a "financially prudent decision". Meanwhile, just over a quarter (27 per cent) of would-be students were reported to be in favour of taking out loans to pay their way through university. However, this figure fell to 12 per cent when parents were asked the same question.
Overall, the majority of parents were said to be willing to make "significant sacrifices" to their financial habits to help their children attend higher education. Some 59 per cent said they would forgo buying a new car with just over half of respondents claiming that they are prepared to sacrifice their annual holiday abroad. Figures from the investment company also showed that 36 per cent of parents would give up retiring early to fund their offspring's university education, although this proportion fell to 29 per cent among those between the ages of 55 and 64.
Last month, research carried out by Lloyds TSB indicated that some one out ten consumers aged 18 to 24 are relinquishing university to save up money to help them get on to the property ladder. The study also revealed that about a fifth of Britons in their 20s have chosen a job which makes more money but which they do not enjoy instead of their preferred career path in an attempt to be able to meet property deposit and secured loans repayment responsibilities. Meanwhile, one in six respondents were reported to be juggling two jobs in a bid to afford mortgage costs. However, mortgage sales director Alison Burns claimed that such consumers may not have to adopt "extreme measures" as a number of potential first-time buyers are said to be misguided about the housing sector.
![[Valid RSS feed]](http://www.talkinmince.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites
