E42: Should you pay for your kids to go to university? With Tom Allingham, Kia Commodore, and Stewart Twynham
The following is a transcript of our monthly podcast, The Pension Confident Podcast. Listen to episode 42, watch on YouTube or scroll on to read the conversation.
Takeaways from this episode
- Tuition fee cap has increased to £9,535 a year - this applies to UK students taking standard full-time courses in England and Wales from August 2025.
- Maintenance Loan often only covers half of student living costs - the average living costs are £1,104, yet the average Maintenance Loan is £600.
- Where you study can make a big financial impact - in terms of post-rent living costs, the most expensive was University of London at £837 and the cheapest was University of York at £318 on average per month.
- Half of students report receiving money from parents - surveyed students said they received an average of £171 every month from their parents.
PHILIPPA: Today, we’re tackling a topic that resonates with many families. Should parents pay for their children to go to university? It’s not an easy question to answer because university has never been more expensive. A new report from the Higher Education Policy Institute found that students need £61,000 to have a minimum socially acceptable standard of living over a three-year degree. But even the maximum annual Maintenance Loan available to students from the lowest income households, that would only cover half of that. So who’s expected to plug the gap? Students or their parents?
I’m Philippa Lamb. And just before we begin, if you haven’t subscribed to the Pension Confident podcast yet, why not click right now so you never miss an episode?
We’re talking about the financial realities of supporting your children through university. And here with me, I have Tom Allingham, he’s the Communications Director at the student money website, Save the Student. Kia Commodore is the Founder of financial literacy platform, Pennies to Pounds. And from PensionBee, Engineering Manager, Stewart Twynham. He’s a father of four. Not only has he financially supported his daughter through university, he packed up and moved his entire family to be closer to her while she studied.
PHILIPPA: Hello, everyone.
ALL: Hello.
PHILIPPA: Here’s the usual disclaimer before we start. Please remember, anything discussed on the podcast shouldn’t be regarded as financial advice or legal advice. When investing, your capital is at risk.
PHILIPPA: Stewart, impressive.
STEWART: That’s what you do, isn’t it?
PHILIPPA: That’s a high bar for the rest of us, I’ve got to say. This is personal, this subject for me, too. My son’s been through uni, he’s just about to start an MA. It’s all very, very expensive. Did you, you all went to university?
ALL: Yes.
PHILIPPA: Did you leave with a lot of debt?
TOM: Yes. And it’s grown since as well.
PHILIPPA: Do you want to put a number on it?
TOM: Yeah, I can. Yes, I think when I graduated, it was around, I think £55,000, and that was in 2015. And the last time I checked, which was within the last couple of months, it was now over £70,000.
PHILIPPA: Wow. It’s a lot. How do you feel about that? Does it really bear on you?
TOM: It doesn’t really because I’m - and maybe it’s because of the job I do as well - I’m aware that it’s not a debt in the traditional sense, as you always hear people say. And yes, it’s a chunk out of my income every month, but it’s not affecting my credit score. I know that it’s going to be wiped after a period of time. There’s no obligation for me to repay it in full.
And I know as well that in reality, I probably wouldn’t have got this job had I not been to university. I wouldn’t have got the job I got when I got out of university had I not gone. So yes, it’s a lot of debt, and yes, it’s a chunk out of my salary each month, but it probably was worth it for me, at least.
PHILIPPA: Do you feel the same way?
KIA: Good question. I graduated in 2021, but it was delayed a year because of COVID-19. For me, I think it’s a big decision to ask an 18 year old what you want to do the rest of your life.
PHILIPPA: Yeah.
KIA: I had no idea. I was also the first in my family to go to university, so there was an added pressure on my back that there was no other option. I went to university, I studied French and Business - because I didn’t really know what I was going to study. It’s come in handy, thankfully, but I didn’t really know what I wanted to study. I’ve checked, again, like you, in the last couple of months, and I think I’m close to £90,000. Because I did a four-year degree and I had a lot in Maintenance Loan.
It’s a big chunk of money. I’m in two minds. I’ve always said very openly that if I had my time again with the knowledge that I have, I probably wouldn’t have gone down the degree route. I might’ve gone down to a degree apprenticeship or traditional apprenticeship route. I mean, it’s great I’ve got a degree, but I don’t think it has as much of an impact in terms of what I’m doing.
PHILIPPA: As you say, it’s so hard to know at 18, particularly if you’re first generation. Whose advice do you take? [The] job market looks like you’ve got to have one, so off you go. Stewart, how was it for you?
STEWART: Well, very different. I’m from a generation where it was usually a grant. I topped up a loan, probably just over _basic_rate_personal_savings_allowance in my final year, the first year of student loans. I remember it was a huge debate within the university at the time. We were all saying, “this is a terrible thing. This is a terrible thing”. I was one of the lucky ones, really.
What are Tuition and Maintenance Loans?
PHILIPPA: Tom, where are we now? Because there are tuition fees and there’s cost of living and Maintenance Loans. So should we get tuition fees out the way first? How much are they now?
TOM: I mean, tuition fees, they do tend to grab the headlines. Even though, as I think we’ll probably touch on a bit later, they’re not actually the main issue for most students. But as you say, let’s touch on them now. I guess, tuition fees for this upcoming year, which is _current_tax_year_yyyy_yy, have risen to £9,535. That’s for most students.
So it’s free for students who’re from Scotland and go to university in Scotland. And if you’re from Northern Ireland and you go to university in Northern Ireland, it’s around half the cap across the rest of the UK. So it’s £4,855. But as I say, for most students, it’s that figure of just over £9,500 a year.
PHILIPPA: OK. And obviously they started out much lower?
TOM: Yeah.
PHILIPPA: Most students take out loans to cover them, do they?
TOM: Yeah, I think the figure’s about 9_personal_allowance_rate of eligible students take out a loan.
PHILIPPA: But living costs, that’s a completely separate system.
TOM: Yes. Well, it is and it isn’t. You take out and apply for the loan via the same system. So when you apply for your tuition fee loan, you’ll get the option to apply for a Maintenance Loan as well. But, whereas a tuition fee loan covers the cost of tuition in full, a Maintenance Loan won’t cover, in most cases, won’t cover your living costs in full. In a lot of cases, it falls almost below the level of half your living costs.
PHILIPPA: Yeah, we’re really going to get into that because that’s the big issue, isn’t it? And of course, these are loans, aren’t they? Interest rates. How much are they charging now?
TOM: Yes. So again, annoyingly, as with quite a lot of aspects of student finance, it varies depending on where you’re from in the UK. But for students from England who are starting uni this year, so that’s Plan 5, as it’s known, it’s now set at 3.2%. So that’s the rate of RPI [the Retail Price Index] from March earlier this year. That does vary, but the change that came in with Plan 5 compared to Plan 2 is that it’s now just the rate of RPI, whereas on Plan 2 in the past, it was RPI plus up to 3%. Now with just RPI, in effect, you’re never going to repay back more than you borrowed in real terms, but it’s still obviously growing.
PHILIPPA: OK, so it’s stepping in the right direction.
TOM: Yeah, in some respects. Yeah, so one really important thing to note about Plan 5 as well, which is the new repayment plan for students in England that came in in 2023, is that aside from all the other changes, the repayment term has now been extended from 30 to 40 years. You now have to wait 40 years since you first become eligible to repay for that balance to be wiped. For a lot of people, you’re talking about pretty much the vast majority of your working life.
PHILIPPA: This is where the rubber hits the road. What’s the average living costs for students compared to the Maintenance Loans they can get?
TOM: Well, according to our research, the average student is spending just over £1,100 a month on their living costs. But the thing that I always try to say is that that’s reflective of a very poor living standard.
PHILIPPA: And this is including rent?
TOM: This is including rent.
PHILIPPA: So this isn’t London?
TOM: Yeah, in London, the average cost is maybe £200 [or] £300 a month higher than the rest of the UK. But as I say, that’s not reflective of a good living standard. Students tell us that they skip meals, cut back on going out with their friends, all these kinds of things. So that’s what you can survive on, but I wouldn’t say it’s what you should be surviving on.
How families can navigate university costs
PHILIPPA: OK, so we see the problem right there is a huge funding gap here. That brings us, of course, to the bank of Mum and Dad, doesn’t it? Do we know how many students are getting help from their parents?
TOM: Yes, 5_personal_allowance_rate of students said that their parents contribute to them, which -
PHILIPPA: Only 5_personal_allowance_rate?
TOM: Well, this is it. So half do and half don’t. Of those that do, they’re receiving an average of £171 a month, which isn’t nothing, but when you bear in mind that the shortfall between the average loan and, again, that very, very poor living standard living costs, in our survey, that’s £504 a month shortfall. Parents are only contributing £171 a month, so that’s still the best part of £300, £350 that students need to make up from other sources.
PHILIPPA: Yeah, and we’ll get on to how they’re managing that. But why don’t you tell us how it was for you and your family?
STEWART: We made the choice that, well, my eldest daughter wanted to go to university. It was easier to move house to actually be closer, so she could commute in.
PHILIPPA: Where were you?
STEWART: So we were in a remote rural part of Scotland. We moved to the borders. She was studying in Carlisle, so it was a couple of stops on a train. So [she] could be dropped off by Mum, to get to uni when she had studies. It was a much better experience, [she] could live at home.
Not an ideal situation, because that was when COVID-19 hit. So that complicated matters further. But it did make a big difference. She was able to make friends, decide who she wanted to move in with for the second and third year. But it made a huge difference to start that off.
PHILIPPA: She was happy with that? Because obviously not all students would choose to stay at home, or indeed could stay at home.
STEWART: No. She had the choice of different universities, but it just made sense, and it just made it an easier start. We also had been saving for some time as well. We saved for both our eldest, basically from when they were born, putting away a small amount of money. We were lucky, we had a Financial Adviser at the time who said, “right, you’re going to have to start thinking, get some money together”. So we were putting something like £25 a month into an ISA, the price of a takeaway pizza.
And that actually is enough to make up much of that shortfall. It’s not perfect. My daughter still had to go out to work. She had several jobs, through the second and third year, to bring that standard of living up. And you’re right, otherwise you’re into the skipping meals territory.
PHILIPPA: How was it for you at university? I mean, you’re not long out.
KIA: I’m not long out. I’m from London, from East London, but I went to university in Coventry, and I did that purposely. I mean, it’s amazing that your daughter wanted to stay at home. I wanted the opposite. I wanted to enjoy, and I wanted to experience uni to the fullest, I knew that staying at home wouldn’t have given me that. So I moved out to Coventry.
And my first year, I lived in student halls, I think most students do. That was very expensive, £6,000 to £7,000 for the year? I didn’t have enough money, obviously, to pay that. So that was very difficult in [my] first year. However, I made sure that I ate good meals. That was one thing that my dad said, “you have to make sure you eat”. Because there’s this, obviously, perception that students skip meals or you have packet noodles. That’s what I didn’t have.
PHILIPPA: Hard to learn.
KIA: I was the person, you go to supermarkets, and you find those yellow stickers.
TOM: Yeah.
KIA: My dad taught me well. That’s what I did. I made the most of all of that. But [in my] second and third year, I made the decision to find cheaper accommodation. I moved in with friends and my rent dropped down drastically to around £300 a month, which was amazing. Absolutely amazing. I was able to save money for the first time in university.
PHILIPPA: Interesting.
KIA: And again, I was able to be able to do more with my friends. I remember I started going on holidays then because I had more money, and I was working to obviously supplement the lifestyle. But I was able to do a lot more and put money into ISAs because of that drastic cut.
The impact of household income
PHILIPPA: It’s interesting hearing Stewart talk about saving from birth in that incredibly impressive way. I think we’re all impressed about that. That’s not really been a British mindset, has it? In the States, where people have paid for their education for such a long [time]. I mean, forever, really. That college fund idea, I think it’s really in the culture, isn’t it? We don’t really have that, do we? But we need to get it, don’t we?
KIA: Absolutely. I mean, my family didn’t have the extra money, so there was no bank of Mum and Dad for me, unfortunately. They saved for - my dad has two kids, myself and my brother. He saved for us, but it wasn’t necessarily for university. I think because he knew that we could get a loan, that he said, “well, you can - there’s support there, so you don’t necessarily need me to do much”.
PHILIPPA: With the best will in the world, there’s a misconception, isn’t there, about the loan system? You think, yeah, there are Maintenance Loans. It’s going to be OK. We don’t need to fund this. But talk us through how the Maintenance Loans work, because it’s not a lot. The family thresholds of income are low, aren’t they?
TOM: They are, and that’s a really interesting point. It basically works on a sliding scale across most of the UK anyway. But the minimum income threshold in England is £25,000. If you have an income of £25,000 or less, you get the maximum Maintenance Loan for students with your living situation.
PHILIPPA: How much is that? How much do you get?
TOM: It varies depending on whether you’re at home, away from home outside London, away from home in London. But just as an example, if you’re in London in this coming academic year, you’d get just shy of £14,000. Outside London, you’d get about £10,500. At home, I think it’s about £6,500 - £7,000.
As I say, £25,000 or less is when you get that maximum loan. But that figure has been set since 2008. Obviously, salaries have increased since then, inflation since then. I think were it to have increased with average earnings, that figure should be around £33,000, £34,000 now.
PHILIPPA: Wow.
TOM: So fewer and fewer students every year are eligible for the maximum loan.
PHILIPPA: That’s a huge issue, isn’t it?
TOM: Oh, massively. It’s probably the single biggest, but also least known about, issue with the student loan system.
PHILIPPA: Yes! I hadn’t realised that that number had stayed the same for so long. Through a period of high inflation. So a massive problem for the students with the biggest need.
TOM: Yeah, absolutely. I think because it’s slightly past the point of being too complicated to really explain it in a compact sound bite. And it’s not particularly glamorous in the way that tuition fees are.
PHILIPPA: Yes, they grab the headlines, don’t they? Tuition fees. We always hear about that. But we don’t hear a lot about Maintenance Loans, do we? So at the other end of the income scale, as you say, sliding scale. So if you’re earning more, where’s the point at which you can’t have any loan at all?
TOM: Fortunately, there’s no point where you get no loan, but there’s a point where you get the minimum loan. Again, it does vary depending on the living situation of the student. So again, if you’re living at home, it’s just shy of _annual_allowance. If you’re living away from home and outside London, it’s just over £62,000. If you’re living away from home in London, it’s just over £70,000 for the household income.
PHILIPPA: OK, and then you’re getting considerably less.
TOM: You are, yeah. If you’re living at home, you’re getting just shy of £4,000 a year. If you’re living inside London, you’re getting just shy of £7,000. And outside London, just shy of _starting_rates_for_savings_income. In each case, you’re getting roughly half of what the maximum amount is.
PHILIPPA: It’s interesting, this isn’t it? Because we’re talking about household income. There’s various issues there, aren’t there? Because household income, you’ve got two people working, who knows how many children you might have in the family. So even if your household income is £70,000 or more, sounds like a lot? Isn’t necessarily that much. If everyone’s working, you’ve got a bunch of kids to support.
And then, of course, there’s the question of household income has always struck me as a bit dubious, because what if they don’t want to contribute? Not everyone is able to or chooses to, do they? If there’s been a family break up, if there’s a new partner in the household who doesn’t have anything to do with you financially - their money is still counted, isn’t it?
TOM: It is, yeah. The example you bring up of new partner in the household is the one that we always have students contacting us about -
PHILIPPA: Do you?
TOM: - saying, “my Mum’s just got a new partner, but he’s only lived with us for a year. He doesn’t feel like he should be contributing to my university experience”. But in the eyes of the government, in the eyes of the student loan system, that new partner is as equally financially responsible for you as your Mum in that situation. But your other parent, who may not live with you anymore, again, in the eyes of the student loan system, they have no financial obligation to you.
PHILIPPA: That’s a very odd system, isn’t it?
TOM: It is.
Is university good value for money?
PHILIPPA: OK, so I think we’ve laid out the problem, haven’t we?
KIA: Yes, it’s a big problem.
PHILIPPA: All right, well, I guess we’re getting to the heart of it. Is university good value for money?
TOM: I mean, you said that you maybe wouldn’t have done it.
KIA: University was great. I met a lot of amazing people. I had so much growth, and I’m glad I did go to university for that element. But in terms of my degree, if there’s any consolation, I can speak fluent French now - which is great.
PHILIPPA: Always handy?
KIA: Great, but I don’t know if it was worth almost £90,000. I don’t know if it was worth that.
PHILIPPA: It feels quite pricey.
TOM: Could’ve got Duolingo for free.
KIA: I think I could’ve got a private Tutor. It’s a cheap way to do that. But I think it’s the environment that you go to. So I went to a really good sixth form. I managed to get into a really good sixth form, one of the best in the country.
And there was no other option presented to us other than university. So I didn’t even know about it. And then I had friends who went to other sixth forms and colleges who said, “I’m going to go do a degree apprenticeship”. These are all things that we never knew about.
PHILIPPA: They were never discussed with you?
KIA: Never discussed. We never heard about it.
PHILIPPA: That’s interesting, isn’t it?
KIA: Never heard about it.
TOM: I don’t know if they really were with us either, to be honest.
STEWART: No, in our case, our son decided, obviously through COVID-19, going into S5 in Scotland and then looking up options, staying on to S6 and where to go next. He took the view that, actually, “I don’t want to do this. I want to do a vocation”. So he took an apprenticeship, Light Vehicle Technician, and he’s thoroughly enjoyed that and he’s doing really well. But his Headmaster at the time was shocked, because everyone goes off to university. That’s the expectation.
PHILIPPA: So if you’re intellectually capable, you’ve got the grades, you should go?
STEWART: Yes. That’s the assumption.
PHILIPPA: It’s still the zeitgeist. But he didn’t?
STEWART: He didn’t.
PHILIPPA: And he feels that was a good choice?
STEWART: He feels that was a good choice. There’s the social aspect. I think he does feel he misses out on something there, but workwise, no. The world is still his oyster.
PHILIPPA: Yeah, you hear that with degree apprenticeships as well, the social life thing. But then talking to students now, universities are big, big and sometimes unfriendly places, aren’t there? People don’t always leave with great big friendship groups.
TOM: Yeah, and there are, not thinking we obviously want to focus on the money, but students do talk about loneliness and things like that. Also with the financial issues that they’re facing, they’re not actually able to go out and do all the stuff that maybe they would have done 20, 30 years ago as well.
KIA: Yeah, absolutely. I mean, I definitely experienced that, especially in my first year. I think it was a massive change moving anyway. I did make some friends, but I remember there was a point towards the end of my first year where I called up my dad in tears and I said to him, “I just want to come back home. I don’t think I would” -
TOM: I had a similar thing.
KIA: Yeah, “I just don’t think I want to do this”. I just said “it’s not for me”.
STEWART: I can actually remember picking my daughter up on one occasion, exactly the same story.
PHILIPPA: Do you know, I’m going to say, I don’t think I’ve spoken to anyone who’s been through university in recent years who hasn’t had that experience. So that’s something to factor into the decision, isn’t it?
KIA: Absolutely.
PHILIPPA: If you do decide you want to do it, and obviously, I haven’t talked down university. Fantastic. And I mean, it’s fair to say lots of jobs, you’ve got to have a degree, otherwise you’re not in the vicinity of even being considered.
STEWART: True.
Price of a pint across the UK
PHILIPPA: So we’re in this system. A lot of people will feel they’ve got to do it. And if you want to do something vocational like medicine, well, that’s what you’re doing, isn’t it? You’ve got to do it.
The choice of university is a big one. And obviously, your daughter, Stewart, you made choices around where she wanted to go regionally. But the cost, regional cost of universities, there’s a huge disparity, isn’t there? I’ve got a bit of research on this, actually. It was so interesting.
Does anyone want to hazard a guess of the difference between an average pint in the North East of England versus London? If we’re thinking about living costs, I don’t want to say that students are just thinking about pints!
STEWART: It’s a metric, I think.
PHILIPPA: So what do we reckon the cost differential is?
TOM: So we reckon London is what? £7, £8? I’m going to guess a Northeast pint, we’re going to look at £4, shall we say?
PHILIPPA: The number I’ve got here is £4.56. OK. Very good guess. I mean, this data says £5.59 in London, which I’m going to say seems very inexpensive to me.
KIA: That does seem really low.
TOM: I don’t remember the last time I saw that.
STEWART: No. That’s low.
PHILIPPA: So I think we can say at least a £1 difference. And I mean, we’re joking about it, but this is one drink. So extrapolate that over a week, a month, a term, a year. It’s a lot of money, isn’t it? So choosing where you go, that’s an important thing to do, isn’t it? Obviously, as you say, you didn’t go in London, you went up to Coventry.
KIA: I did.
PHILIPPA: And that must have made an enormous difference.
KIA: Oh, it really did. The cost of living was way cheaper up there. Going out was a lot cheaper. What I will say is I did the crazy thing of applying, getting in, and the first time I ever saw Coventry, or ever went into that postcode, was when I moved in.
TOM: Oh, wow!
PHILIPPA: Really? You didn’t go?
KIA: I had no idea what my accommodation was like -
STEWART: That was brave!
KIA: I had no idea what Coventry was like. I hadn’t spent the day walking around.
PHILIPPA: That was bold.
STEWART: Wow!
KIA: My dad’s like, “there’s your nearest shop. There’s this”. I had no idea. No. Two and a half hours away from my house. I said, “oh, yes”.
STEWART: What could possibly go wrong?
PHILIPPA: Because actually, you made a good point because it’s all well saying, “go to a uni. If you live in the South East, if you’re looking at London, obviously it’s going to be incredibly expensive. Look at going far afield”. But then you do have travel costs, don’t you? Significant travel costs if you want to be home more than once a year.
KIA: Which is why I didn’t really come home much. My Dad begs for me. I said, “unless you’re going to pay for my train ticket, I’ve got to stay”.
Can students supplement costs with part-time jobs?
PHILIPPA: Students, obviously, lots of them work. I think it’s 58% of them now have got a part-time job. Don’t know about you. Did you work?
KIA: Yeah.
PHILIPPA: I worked. But it’s getting jobs, isn’t it? It’s all very well saying “students should be working”, but it’s not always that easy in university towns, is it, to get work?
KIA: I think I spent my entire first year trying to find a job. Couldn’t find a job in first year. So in second year, you know you have the summer break. During that break, I was applying aggressively to jobs, and I managed to get a job in London. We already had a problem; I was in Coventry.
TOM: Yeah.
KIA: There was a dilemma. I was in Coventry. But the difference was I was working out the numbers as well, and I got paid a lot more in London. With a rail card, I managed to save, and I’d try and work Thursday to Sunday, and I’d just stay down at home and get a train back home.
TOM: I see you were commuting?
KIA: Yeah.
TOM: Oh, wow.
KIA: Even though I always had university, I’ll just finish my day on Thursday, get the last train, work Friday to Sunday, and then get the train back, and then come back. But I made a lot more money. I think I made something. I was able to supplement an extra £900 a month, or sometimes even _basic_rate_personal_savings_allowance if I had extra shifts I could pick up.
PHILIPPA: Did you?
KIA: Because I made way more money in London because on average, you get paid more.
PHILIPPA: And you could stay for free?
KIA: Yeah, stay for free. If I booked in advance, I could get a £5 train ticket back home.
TOM: Nice.
KIA: So I was meant to save money, versus the train ticket of about £30. So I’m going to save a lot of money.
PHILIPPA: So you got to be creative on the job front.
TOM: Well, this is what I was going to say, is that’s really impressive. I’m not saying you’re saying this, obviously, but that shouldn’t be the expectation. That shouldn’t be the way that you have to make it work.
Should parents pay for their kids to go to university?
PHILIPPA: This all brings us to the question of, should parents help as well? Because it’s all very well saying if they can, they should, and there’s a moral imperative and all the rest of it.
But parents do have to think about their own money as well, don’t they? And this is a time in life most parents are going to be heading [to being] middle aged, maybe even older with later families. They have to think about their own money. So, Kia, talk us through that dynamic.
KIA: In first year, my Dad and I, we had a lot of conversations around money. He wasn’t able [to], he didn’t have the extra money to support me during university. And it was - I didn’t apply to university with the expectation that he could. But there was points where, like I said, I just couldn’t afford it. I’d call him up and say, “do you have £600 that you could loan me because I need to pay my rent”. He just didn’t have that. I think in first year, obviously, I’m 18, 19, I didn’t understand it. I was very upset towards my dad that he - it felt like he wouldn’t help me.
Then as you get older, and now I’m a lot older, and I realise how much life costs and the expenses. I had my younger brother that my dad was looking after, obviously. I realised that he just physically just couldn’t afford it. We lived in London; he had a house in London. He’s got all these expenses that you need to pay. We already know if you’re in London, it’s just so expensive that there wasn’t extra cash to help me out.
I think for me, I understand that I don’t think I would have wanted my dad to contribute, but at that time when you’re in dire straits, I was like, “oh my gosh, I really need this money. How am I going to get it?” But I remember having a conversation with my dad and he said, “one day you’re going to thank me that I’m not able to help you”. I remember that didn’t end well. That conversation didn’t end well.
PHILIPPA: I’m not really -
TOM: - Not what you wanted to hear.
KIA: - Wrong time.
PHILIPPA: - I don’t quite see how that works.
KIA: No, but now I understand because it did push me -
PHILIPPA: I see what you mean.
KIA: - to really understand. Because I probably wouldn’t have found a job. I wouldn’t have gone as hard as I had to and applied as much as I had to, had my dad was able to bail me out or give me some money.
Financial health check for parents
PHILIPPA: I mean, you must have thought about this, Stewart. You’re a financially organised person. You’ve made this clear to us. Obviously, you wanted to help your daughter. But there are things that families also need to think about. Quite apart from their day-to-day living expenses, there’s the issue of saving for your retirement. Obviously, we’re a pensions podcast. It’s not a thing you can forget about. And all the other expenses that families have.
STEWART: Yes, and those don’t go away when you’re in your 50s, 40s, 50s, when your children are going off to university, that’s a huge challenge for people.
PHILIPPA: And if you’re putting several children through, that’s a long period of time, isn’t it?
STEWART: It is. Looking at the pension statistics for people and the disparity between gender as well.
PHILIPPA: Well, yeah, exactly. I’ve got those numbers in front of me, actually. That whole average pension pot for the over 50s at _state_pension_age, projected to be about -
STEWART: £88,000.
PHILIPPA: OK, which is not going to give you a huge income.
STEWART: It isn’t. Probably a gender gap of around 44%, so male [savers] you’re having possibly up to almost double.
PHILIPPA: Yeah. So for lone women with children, and I did that myself, and that’s a whole issue. Because if you’re looking at funding your children, or child, through university, and then you’re also realising you’re completely dependent on your own resources for paying all your bills and planning for your future, that’s a big deal, isn’t it? We have so many single-parent households now.
STEWART: The mortgage doesn’t go away, and the electricity bill doesn’t go away, all of those things. That’s the reality.
PHILIPPA: This is monetising the whole choice around universities, about what subject you do. You said yourself that you did a business-related degree Kia, because you’re thinking it’s going to be useful. You can see how that would be a paying proposition. But if you want to do something with a brain stretch, you wanted to read philosophy, that becomes more of a question now, doesn’t it? Whether, really, can you justify it?
TOM: I’d say the flip side of that, though, is, and you already mentioned this, in a lot of jobs, just having a degree is the baseline. It doesn’t necessarily matter what subject you studied. So just to pluck an example out of thin air - Marketing, for example. They’re not going to say you need a degree in Marketing. They’re just going to say you need a degree. In which case, if you do have an interest in History or Philosophy or Geography or whatever, and you know you’re going to need a degree to get into whatever career is you have your eye on, then maybe it’s worth studying a subject that doesn’t have a clear career at the end of it.
PHILIPPA: Yeah. But are you seeing - it seems to me now that there’s that, and then now there’s the, “yeah, but you’ll need a relevant master’s degree”.
TOM: Maybe not necessarily at entry-level, but slightly higher. I think the other thing as well is because so many people are going to university, that actually just having a degree is no longer the silver bullet on your CV that it maybe was in the past. Having a master’s, that’s now the thing that can separate you from other people.
PHILIPPA: So, Kia, if families listen to this, they’re thinking about it, and they’re weighing the cost, the pros and cons. I mean, kind of a financial health check on the whole family finances. It’s got to be a good place to start?
KIA: Absolutely.
PHILIPPA: Run us through it. Where should they start with that?
KIA: It’s understanding what your costs are currently. So if you’re a homeowner and you’ve got a mortgage, how much does that cost? If you’re renting, what are those costs looking like? You make sure you’ve obviously covered things like your bills but also understanding that you’ve covered yourself.
I mean, obviously, I think most parents want to help. My dad, as I mentioned, he wanted to, he just couldn’t afford to. But it’s making sure that you’ve covered yourself. Things like your pension, things like other savings vehicles that you may have, making sure that you’ve covered those. If you have other kids, again, another expense, make sure everything’s covered.
Once you’ve done all that and you’ve understood where you’re at financially, then you’re at a position to decide, “OK, can I afford help?” That might be yes or no. If you can, how much does that help? And then have that conversation with your child because you mentioned that stat earlier, I think it was £170-odd is how much a month, right? That’s how much parents typically give a month. That is for someone -
PHILIPPA: That’s a good chunk of cash.
KIA: That’s a good chunk of cash.
PHILIPPA: Out of tax income?
KIA: Your child will definitely benefit. I can say firsthand, any money that you can give definitely helps. So I think taking off the pressure of “how much can I give?” and just having a conversation of whatever that amount is, your child will definitely be grateful.
PHILIPPA: I’m thinking about for how long as well, because we think about three years, but not all courses are three years. If you’re reading Medicine; it’s a lot longer. Architecture, all the rest.
KIA: Absolutely.
PHILIPPA: It’s a long commitment, isn’t it?
How can student finance be improved?
PHILIPPA: Right. So we have the Autumn Budget coming up in November. It looks like it’s going to be the end of November now. We all understand how tight the public finances are. But what would we like to see happen with student finances, given that the generations we’re talking about are the future of our economy. What would you like to see?
TOM: For us, and we’ve been saying this for years and years and years now, but in particular in the past two or three years where Maintenance Loans have not kept up with inflation. In the last academic year, the maximum loan was, I think, £1,900 less than it would’ve been had loans actually kept up with inflation since 2021, I think it was.
PHILIPPA: So much money.
TOM: Yeah, which is huge. That’s for the students from the lowest income backgrounds as well. They’re the ones seeing the biggest real terms cuts. What we want to see is for loans to rise above and beyond inflation to close that shortfall. It’s worth saying as well that all we’re asking at the moment is for loans to get back to the level they were pre-COVID, which even then they weren’t enough. We’re just asking to get back to that level, and then we can address other problems further on the line. But in the short-term, it needs to get back to just that level.
PHILIPPA: Just the baseline of where it started out, which, presumably, the government thought was a reasonable place.
TOM: Well, exactly.
STEWART: I think for me, the income thresholds, that’s really, really important -
PHILIPPA: Yes!
STEWART: - because £25,000 with this starts to kick in. What’s that? It’s one parent potentially on a minimum wage, and maybe somebody else working part-time, suddenly you’re out of that. You’re starting to lose some of that money. That’s a big difference.
PHILIPPA: Yeah, there’s a real inequity there.
STEWART: That needs to be addressed.
PHILIPPA: Yeah, Kia?
KIA: I’d echo both answers, especially because I have a lot of friends who come from that lower income household. That was a decision, whether or not they could even afford to go to university because they don’t have that extra supplement. If you think about all the amazing great minds who perhaps might have missed out on that, purely because of the financial aspect, I think we’re doing everyone a disservice.
PHILIPPA: Thank you very much, indeed. Such a great conversation. I really enjoyed it.
ALL: Thank you. Thank you.
PHILIPPA: If you’re enjoying this series, give us a rating and a review. It really does help us reach more listeners like you. If you’ve missed an episode, that’s no problem. You can catch up anytime on any podcast app, YouTube, or of course, if you’re a PensionBee customer in the PensionBee app itself.
Next month, we’re tackling a fantasy for many, but a reality for only a few, as we ask: who wants to be a pension millionaire? It’s achievable and we’ll be exploring how to do it from financial strategies to mindset shift, so make a date to listen to that one.
Just a final reminder, anything discussed on the podcast shouldn’t be regarded as financial advice or legal advice, and when investing, your capital is at risk. Thanks for joining us. We’ll see you next time.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
Period | Market Event | FTSE World TR GBP (%) | 4Plus Plan (%) |
|---|---|---|---|
4Plus Plan’s inception – 6 Sept 2013 | QE Tapering, China Interbank Crisis and its aftermath | -5.44 | -2.41 |
3 Oct 2014 – 15 May 2015 | Oil price drop, Eurozone deflation fears & Greek election outcome | -5.87 | -1.77 |
7 Jan 2016 – 14 Mar 2016 | China’s currency policy turmoil, collapse in oil prices and weak US activity | -7.26 | -1.54 |
15 June 2016 – 30 June 2016 | BREXIT referendum | -2.05 | -1.07 |
