According to new research, parents are spending their money to pay for their children's college education, thereby losing out on up to £45,000 This money could have been used for their pensions
According to a recent study, one-third of parents are postponing retirement for up to ten years in order to help out their children who are enrolled in college.
More than a quarter (27 percent) will have to delay retirement by ten years in order to top up savings accounts and pensions used for their children's education, despite the fact that parents are generally expecting to work five years longer than planned to cover the costs of their children's continued education, according to the study.
In August 2025, Rathbones hired independent research firm Viewsbank to conduct interviews with 824 parents, including 173 whose children were enrolled in college within the previous ten years and 79 whose children were enrolled in college at the time.
The survey found that parents typically spend £7,200 annually on their children's tuition, money that could be saved for their investment and pension funds.
However, parents bear an even greater financial burden at the margins. Eight percent spend more than £15,000 annually to pay for their children's higher education, while one in seven (14 percent) contribute between £10,000 and £15,000.
According to this, parents may be losing up to 45,000 pounds over the course of a typical three-year degree program. This could result in a loss of tens of thousands of pounds in retirement funds once investment growth is taken into account.
According to Faye Church, senior financial planning director at Rathbones, "But, helping your kids finish college doesn't have to mean that your retirement goals are doomed. Through prudent financial planning and guidance, parents can support their kids without compromising their own objectives.
The cost of attending university is increasing.
Due to the ongoing increases in tuition and related expenses, parents are now seriously concerned about their financial future.
Universities UK estimates that the cost of tuition for full-time undergraduates will rise from 9,250 in 2024 - 2025 to 9,535 in 2025 - 2026.
Property Week's analysis revealed that since 2021, student rents have increased by 72.5 percent yearly, with London students in particular experiencing an affordability crisis as rents surpass maintenance loans.
Although students are eligible for maintenance loans and tuition reimbursements, parents are frequently left to bear the additional expenses. About a fifth of parents (22 percent) cover all of their children's expenses, including tuition, housing, and living expenses, while 27% do so.
Parents' bank account is overdrawn.
Children who attend college face financial burdens that continue long after they graduate and beyond the official years of study.
The majority of parents (55 percent) stated that they continued to provide for their children after they graduated from college. After graduating, less than one-third (31 percent) of parents believe their kids will be financially independent.
It's obvious how much pressure the Bank of Mom and Dad is under. Seventy-three percent of parents stated that paying for their children's college education had a detrimental effect on their financial situation, with some parents incurring debt in order to finance their education.
In order to pay for it, nearly two-thirds (63 percent) of parents have taken money out of savings like easy access accounts, and 29% have sold investments. Others have remortgaged (13 percent), downsized their homes (4 percent), borrowed on credit cards (17 percent), or decreased their pension contributions (17 percent).
"Parents now need to budget for more than just the expenses of three or four years of college; they also need to consider what will happen after graduation," Church said.
Long-term and short-term financial repercussions are being felt as a result of the Bank of Mum and Dad continuing to support adult children. Unfortunately, as the road from college to financial security seems increasingly hazy, this problem is not going away," she continued.
A more difficult job market exacerbates graduates' dependence on their parents.
Graduates make an average of £30,751 a year by the age of 31, which is a third more than non-graduates' salary of £22,482. However, under the Plan 5 scheme, graduates must also repay their loans after they make more than £25,000. According to government data, the typical 2024 graduate will have £53,000 in student loan debt.
Additionally, according to Universities UK, the percentage of graduates working full-time 15 months after finishing their studies decreased from 61 percent in 2021 - 2022 to 59 percent in 2022 - 2023.
How to finance your child's college expenses.
It doesn't help right now that this financial investment will probably pay off in the long run. Loans can be used to pay for tuition and some maintenance expenses, allowing the graduate to handle the money later. To help pay for some of their living expenses, many students will work in addition to their coursework.
Nonetheless, a lot of parents will still have to help out with the remaining living expenses. Even worse, maintenance loans have become much less competitive as prices have increased. The fact that students are becoming poorer every month raises the possibility that their academic performance may suffer. Families might need to support them during a phase of life that gets harder and harder.
"It might be worth considering having a conversation if you're already contributing whatever you can and you haven't already spoken to the wider family about this," stated Sarah Coles, head of personal finance at Hargreaves Lansdown.
Coles offers her best advice on how to lessen the financial strain of sending kids to college.
Grandparents presenting gifts.
It may be possible for grandparents to speed up the process and provide assistance at a time when it can have a significant impact if they had intended to give gifts later in life. This might also be advantageous to them if they are worried about a possible inheritance tax bill.
Coles noted that "if they chose to give regular gifts from their income, this would fall outside their estate immediately for inheritance tax purposes," which would spare their loved ones from paying inheritance taxes.
Junior ISA.
Financial considerations should be taken into account as soon as possible by anyone who believes their child may attend college in the future. The Junior ISA is a well-liked location for kids' investments or savings.
You can set aside up to £9,000 annually, and it will grow tax-free until the child is eighteen. By locking up this money, you can make sure they don't spend it too soon in their youth and still have enough for when they're old enough to attend college.
"It's best to begin investing or saving early. In order to give their grandchildren a head start in adulthood, Coles suggested asking grandparents to step in during financially difficult times if this seems like a stretch during their early years and other costly childhood years.
You don't need a lot of money to start. You can get on the right track without going over budget if you put in £25 a month.
You have the option to save this money or invest it in stocks and shares through a JISA, but investing is typically a better long-term choice. During the 18 years of a JISA, there is typically ample time to weather the stock market's short-term volatility and benefit from long-term growth.
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