Paying for university: how parents are taking action to minimise debt pressures for their children

As the new intake of undergraduates start their degree course, the clock is ticking on parents of children aged under 18 to decide how to cover the cost of sending them to university.

Research by AJ Bell* finds that nearly half (46%) of parents of under-18s are now saving towards university costs, and a further 21% have done so in the past but are not currently putting money away.

The total cost of going to university could easily be £60,000 or more, when factoring in tuition, accommodation and general living costs over a three-year course. That’s a big outlay.

AJ Bell’s research found the biggest proportion of respondents (13%) had saved between £5,000 and £10,000 for their child or children’s university education. This was closely followed by 12% saying they had built up a pot worth between £2,000 and £5,000, and the same proportion with pots less than £1,000.

Those actively saving today have adopted a ‘little and often’ approach, with the most popular amounts being either up to £25 a month or between £50 and £99 a month. This might involve sacrificing a meal out or a couple of trips to the pub, yet it can make a massive difference to the recipient during and after university.

Reducing reliance on student loans

Certain people might take the view that a mixture of tuition and maintenance loans are standard practice for funding a university course. They might think the repayment system isn’t onerous as it doesn’t kick in until the recipient starts to earn £25,000. The student loan is written off after 40 years and it is feasible that many people won’t end up paying back the full amount.

However, parents are increasingly concerned about their children leaving university saddled with debt before their career has even started. It can have a negative psychological effect on a person, making them feel like they’re fighting a battle with their personal finances from day one of post-university life.

Once individuals hit the earnings threshold to start repayments, the student loan acts as a 9% tax on their income, potentially for decades. That can make people feel anxious about their finances.
It can dissuade individuals from developing a good savings habit at an early age, if they feel like every spare penny is being consumed by student loan repayments.

This might explain why many parents are proactively looking for solutions to the problem. Encouragingly, a good proportion of parents are squirreling money away while their child is still at school, ready to help them in further education and put them on a stronger footing in life.

How to form a university savings plan

It isn’t imperative that parents save the full amount to cover all university costs. Any contribution that reduces the debt burden on the child is a positive step forward. Clearly, more is preferable.

The sooner you start to save for your child, the better. Admittedly, certain individuals or couples find they are strapped for cash during the early years of childhood, particularly if they pay for a child minder or nursery fees. In this situation, anything you can save is good, even if it is only a small amount. It’s all about getting into the habit.

There is still time to play catch-up once the child goes to secondary school and childcare costs reduce dramatically. For example, Sadie invests £100 a month into a global equity fund once her 11-year-old daughter Chloe starts secondary school. The fund grows by 7% a year after fees and is worth £10,874 by the time Chloe turns 18.

Had Sadie been able to save £100 a month from Chloe’s fifth birthday and achieved the same 7% investment return, she would have a pot worth £25,175 by her daughter’s 18th birthday.

The saving doesn’t need to stop as soon as the child becomes an adult. University costs are spread across the length of the course, be it three, four or more years.

The key thing to consider is that you might want to dial down the investment risks being taken closer to the point at which the money is needed. That could involve switching into more cautious investments that aim to preserve capital as a priority. The worst thing to happen is a stock market downturn just at the point you need to spend the money you’ve worked hard to build up.

The benefits of a Junior ISA

An ideal way to save for university fees is to use a Junior ISA. Up to £9,000 can be paid into this account for your child each year, and contributions can be made by yourself, family and friends. But remember, any money paid into a Junior ISA is locked away until the child is 18, so you won't be able to access it until then.

The money legally belongs to the child so there is an element of trust that it will be spent on university costs and not frittered away. All capital gains and income generated by the investments inside the Junior ISA are tax-free.

Funds and investment trusts are the most popular holdings in Junior ISAs on AJ Bell’s platform. Investors managing the accounts have gravitated towards funds that provide exposure to companies around the world, or specifically to the US market perhaps as that region has delivered strong gains over the past decade.

*Opinium surveyed 2,000 adults in the UK on behalf of AJ Bell between 29 August and 2 September 2025, of which 629 were saving to help a child’s university costs.