Brighton (PRWEB UK) 21 August 2012
The annual living cost of being a student will reach £11,000 for those starting university this year, according to analysis* by Family Investments, a leading children’s saving provider. The increase is equivalent to a rise of 7% as annual living costs increase from £10,186 twelve months ago to £10,929 today** - an increase of £743.
On a monthly basis students have seen their living costs increase from £848 in 2011 to £910 today. This increase does not include the new university tuition fees which take effect from September and will add a significant strain - up to £9,000 annually - to student finances. In total, students could find their time at university costs them as much as £20,000 per year, which is clearly out of the reach for many parents to fully fund, particularly for 3 or 4 consecutive years.
Rent is the biggest single living expense with the average student currently spending £165 a month on accommodation, up from £159 a year ago, that’s around 18% of monthly outgoings. Transport costs have increased 17% from £71 twelve months ago to £78 per month today and with the expected hike in train fares announced this week these costs could rise even further.
In 2004, when figures on student living costs became available, the monthly cost of living was £561, since then students have seen living costs rise by 62%, an annual increase of almost 9% a year. Food costs have seen the greatest inflation with expenditure rising 77% since 2004 rising from £44 to £78 a month.
The issue of tuition fees dominates current discussion of student finances but this is only part of the picture as rapidly rising general living expenses are also having a big impact on the affordability of a university education. If the cost of living continues to increase at current rates, those students starting a degree in 2012 may see annual costs hit £13,159 by the time they graduate in 2015***. The increase of £2,230 compared against today’s costs, would be a significant addition in its own right and students will be hoping that falling inflation rates eventually filter down into their living costs.
Kate Moore, Head of Savings and Investments at Family Investments said: “Figures reported last week indicated there were 15,000 fewer university applications for places starting this year. The impact of significantly increased tuition fees is clearly being felt and is acting as a disincentive for many who would otherwise apply.
“For those A level students hoping to attend university, the wait is over and they will now know if they have achieved the necessary grades. For many parents, the big question is how to finance such a cost at a time when they need to take into account not just tuition fees but very significant living costs too. With inflation creeping down towards target, students and parents alike will be hoping that this eventually filters down to their living costs.
“Of course, the huge increase in tuition fees will have taken many by surprise and left little time to save towards the cost. Taking a long-term view however, it would seem that these fees are here to stay so a shift in the savings culture in the UK would help parents prepare for the future, similar to the college fund savings culture of the US. Spreading this saving over an eighteen year period can significantly reduce the financial burden.
“One of the best ways to start saving early is through the Junior ISA, a new tax efficient savings account for children launched last year. Family Investments offer a Junior ISA that allows parents to save from as little as £10 per month. However, awareness of this product is fairly low amongst parents so we are urging the government to get the message out that it’s good to save from an early age and that Junior ISAs are an ideal way to do this.
“Family Investments research shows that parents need to be saving around the equivalent of their child benefit each month in order to cover student living costs through university. Smaller contributions will however go a long way, particularly if parents start at an early stage and allow for the potential impacts of compound interest or stock market growth.”
Student cost of living
Total monthly cost of living Total annual cost of living Monthly cost of rent Annual cost of rent
2004 £561 £6,732 £122 £1,464
2012 £910 £10,929 £165 £1,980
2015 £1,096 £13,159 £186 £2,238
Estimated returns from an equity based investment product with an annual growth rate of 7%
Monthly saving contribution returns £50 per month Child Benefit equivalent of £81.20
8 years £5,982 £9,715
13 years £11,225 £18,226
18 years £18,041 £29,300
For further information visit: http://www.family.co.uk
- Ends -
- Based on analysis of ONS Family Spending Reports from 2004 – 2012. The analysis looked at the increasing/decreasing cost for each of the various spending categories and overall cost of living for students. The average increase/decrease in cost was taken to calculate the cost in 2011 and 2015.
** Annual figures assume the student pays costs such as rent 12 months of the year
***Based on the average increase in annual living costs between 2004-11
About Family Investments
Notes to editors
About Family Investments
- Family Investments is dedicated to being the trusted provider of financial solutions for the family
- Family Investments currently looks after more than £3.5 billion of family money for more than 1.78 million people in the UK
- Family Investments is a mutual with over 35 years experience providing investments for families. They are owned by their customers which means that they are directly answerable to them
- Family Investments is the UK’s favourite Child Trust Fund provider with 1.3 million Child Trust Fund accounts
- Family Investments’ Child Trust Fund was voted best CTF at the 2010 and 2011 Moneyfacts awards
- Family Investments was the first provider to announce details of a Junior ISA and is market leader in the provision of equity based Junior ISAs
- Family Investments was awarded best Children’s Finance Product Provider at the Personal Finance Awards 2011/12
- Family Investments also developed Family Nest (http://www.familynest.co.uk), the website that aims to make family finances simple
- Family Investments offers an Ethical CTF and Junior ISA which tracks performance of companies included in the FTSE4Good UK 50 Total Return Index
- The company’s expertise is widely trusted and recognised, which is why Family Investments has been chosen to provide the ISA product for the Post Office and Bounty
- Family Investments has also previously provided Child Trust Funds for the likes of Barclays Banks, Santander and the Post Office
- Family Investments is the trading name of Family Assurance Friendly Society and is authorised and regulated by the Financial Services Authority
Follow us on Twitter: twitter.com/familyinvest
Visit our website: http://www.family.co.uk
Other websites: http://www.familynest.co.uk
For further information, please contact:
Jonathan Henderson Matt Battersby
Hill + Knowlton Strategies Hill + Knowlton Strategies
020 7973 5930 020 7973 5947