Should you pay your child’s university costs? The truth most families avoid

The cost of further education often comes up in conversations I have with clients. Parents are understandably concerned about the debt their children are likely to accrue and are looking for ways to mitigate this.

If you’re in this position yourself, you may assume that the best way of helping out is by paying up. But that’s not always true.

Indeed, I would go as far as to say that paying your child’s university fees could be one of the less effective financial decisions you make.

Read why I think that’s the case.

Understanding the cost of a degree

Firstly, let’s get the stats out of the way.

Tuition fees

Tuition fees at universities in England and Wales are capped at £9,250 a year (as of the 2025/26 academic year).

That is the headline figure you see in the media. However, there are other costs associated with attending university that are often overlooked and can create financial issues for students after they complete their degree.

Accommodation

If they aren’t fortunate enough to live in university halls of residence – and at most that is likely to only be for the first year of their course – students will need to find rental accommodation.

The cost can vary depending on where you are in the country and the type of accommodation. But according to StudentFM, rental costs could be up to £750 a month outside London and £1,200 in the capital.

While more convenient, halls of residence will only be slightly cheaper.

Living Costs

On top of accommodation expenses, you also have to take into account other living costs. These will include eating, travel costs, and enjoying a social life.

Again, these are likely to be much higher in and around London.

StudentFM suggests that students outside London now spend between £900 and £1,400 each month on accommodation and living costs. At the same time, those studying in London can expect to pay closer to £1,400 – £2,000 per month, depending on lifestyle choices.

Loans are available for tuition fees and living costs

For most students, tuition fees are paid directly to universities through a loan from the Student Loans Company.

Clearly, however, tuition fees account for only a percentage of the total cost of attending university, and the real financial challenges often come from rent and day-to-day living expenses.

Maintenance loans, paid directly to the student, are available to cover living costs. The minimum loans range from just over £4,000 if your child is living with you to £7,039 if they are living away from home in London.

In each case, loan repayments depend on future income, not total debt.

You repay at 9% of income above a threshold – currently £25,000 to £29,385 in England and Wales, and higher in Scotland. Because of this, it’s fair to view student loans as a graduate tax rather than a traditional loan.

Importantly, any debt still outstanding after 30 or 40 years, depending on when the loans were granted, is written off. This means that many graduates never repay the full amount.

Providing financial support while your child is at university

As a parent, it’s understandable that you want to support your children as much as possible. However, it’s important to consider the debts they incur and to adopt different approaches for different types of debt.

For example, maintenance loans rarely cover full living costs, so when the dust settles, many students will face an annual shortfall and a lingering debt burden, on top of the debt from outstanding student loans.

While your child is studying, there are strong reasons to help them financially. Not constantly having to worry about money can help your child’s mental health and wellbeing, and the reduced stress they experience could be reflected in better degree results.

You may even want to make your financial support conditional on better grades, or part of a quid pro quo in which they find part-time work during the holidays. This helps them contribute towards their own living costs the following term.

It could pay you to think strategically about student loan debt

While providing financial support for your child during their studies is an effective use of your money, I’d suggest taking a more nuanced view of their student loan debt.

Understandably, you may see any unsecured debt as a bad thing, which should be avoided or cleared as quickly as possible.

That’s a natural reaction, but UK student loans are not like normal debt.

For one thing, as you have read, repayment is subject to earnings, and the debt is written off after a certain period. Because of this, paying off your child’s student loans may be solving a problem that doesn’t exist.

Before you do, it’s worth considering your child’s future earnings potential.

If they are likely to be high earners, strategic early repayment may make sense, as they are likely to repay much or all of the debt themselves.

Alternatively, you may want to consider lending them the money to clear the loan rather than simply gifting it, perhaps with a different repayment schedule and interest rate.

However, if your child is likely to be a lower or middle earner, paying off their loans may be financially inefficient.

It may well mean that:

• You will be spending money you may need yourself at a later date
• The loan may not need repaying anyway
• You could use the money more productively for your child by investing it or using it as a deposit on a property, for example.

Clearly, there’s no one-size-fits-all answer to the issue of repaying student debt, but it’s important to consider the pros and cons rationally before you do.

I would also add that it’s important not to jeopardise your own long-term financial security by helping your children.

Get in touch

If you would like to talk about the issues I’ve raised in this article, please get in touch.

You can call me on 07769 156250.

Please note

This blog is for information purposes only and does not constitute advice or a personalised recommendation. The information is intended only for individuals.

Please do not act based on anything you might read in this article. This blog is based on our understanding of current and proposed legislation, which may change.

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a guide to future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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