Students in the UK face a cost-of-living crisis as loans and grants fail to keep up with utility expenses, and the gap between income and expenditure for a typical student grows. According ton recent research by the think-tank ILC-UK, which surveyed 2,072 British grandparents, a rising number of students are likely to receive financial help from their grandparents.
Grandparents are a common solution
More specifically, 3% of grandparents have helped fund a relative’s university fee and this is expected to rise to 13% in the next decade, which means that essentially one in eight grandparents – 1.7 million over-55s – expect to be the financial sponsor of their grandchildren’s tuition fees while struggling to meet their own living costs in retirement.
Students resort to financial support from their grandparents as the burden of the annual £9,000 tuition fee. On top of that, the increasing living expenses are becoming even more unbearable for youngsters. A report from last year also revealed that one in ten young people asked their grandparents for help when buying their first home. Many young people feared they would have to live with their parents into their 40s and 50s because it would be so difficult to afford homes of their own.
But grandparents’ ‘money tap’ does not come without problems. Those over 55 are financially under strain from falling annuity rates and unprecedentedly low savings rates. How can they really assume extra commitments?
Students are also facing significant financial obstacles. According to the National Union of Students, rent, bills and other expenses continue to rise year after year above the rate of inflation but sadly grants and loan rates were frozen this year and will only rise by 1% next year.
Based on estimations, the gap between income and spending for a typical student amounts to more than £7,600. This makes sense as it is estimated that a student living outside London will pay an average of £21,440 in tuition fees, books, equipment, rent, travel and other living expenses.
Against this, they have a potential income of £13,747, which is made up of their tuition fee loan plus maintenance loans and the grants available to those on average and low incomes. This leaves a deficit of £7,693.
Well, resorting to the ‘bank of gran’ for those who can afford it is fair enough. But other students whose mum and dad or grandparents are unable to fund them will inevitably have to get a part-time job to get by. To handle this situation, a sustainable financial support system is needed to ensure students get the support they need, when they need it.