Up to 1.7 million grandparents expect to have to contribute towards university fees. Around 364,000 grandparents have already contributed.
Grandparents are expecting to have to dig deep to help grandchildren afford university fees, reveals new research* produced by over-55s specialist adviser Key Retirement Solutions exclusively for ILC-UK.
The research has been published ahead of a major piece of academic research by ILC-UK, supported by Partnership and Key Retirement Solutions which will be published on 15th October and which explores the full extent of grandparental giving.
The nationwide study found just under three per cent of grandparents have already helped fund fees – but that number is set to rocket to nearly 13% over the next 10 years. Which means that one in eight grandparents – equivalent to 1.7 million over-55s - expect to have to help pay grandchildren’s university fees while at the same time funding their own retirement aspirations.
While UCAS figures** showed a nearly 8% drop (2011 to 2012) in university applications following the increase in maximum tuition fees to £9,000 a year, this trend is starting to reverse. Around 637,456 students applied in 2013 compared with 618,247 in 2012 which suggests that people are using other sources of funding – such as family - to meet these increased costs.
The older generation is aware of their grandchildren’s educational aspirations – and potentially expectations – with around 10% of those aged between 55 and 64 believe they will have to make contribution rising to 15% for over-65s.
Almost three-quarters (73%) of over-55s expect to dip into their savings to help grandchildren while around nine per cent will rely on investments. However, despite benefiting from significant house price inflation only four per cent will use property wealth such as increasing their mortgage or equity release to raise the money.
Dean Mirfin, Group Director at Key Retirement Solutions (www.keyrs.co.uk), said: “Helping out family is a powerful motivation for grandparents and contributing towards university tuition fees is a reasonable investment of savings.
“The numbers of grandparents providing financial assistance for university tuition is set to rocket from current levels as the implications of the maximum £9,000 a year tuition fees become clear.
“With finances for the over-55s under strain from falling annuity rates and historically low savings rates taking on extra commitments requires careful thought and planning.”
David Sinclair, Assistant Director, Policy and Communications at ILC-UK added
“Boomer bashing, or blaming the baby boomers for the current economic challenges facing young people is becoming very fashionable. Yet what this research, and ILC-UK’s forthcoming work will reveal, is that older people are playing a significant role in supporting younger people through education.”
* Consumer Intelligence interviewed 2,072 parents and grandparents for Key Retirement Solutions between August 16th and 20th 2013
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