Parents Underestimate Student Debt

Parents underestimate student debt by over £4,000, new research from the Association of Investment Companies (AIC) has revealed.

The organisation's annual survey has found that parents believe their children will own on average £9,681 when they leave university. The actual average level of debt facing graduates currently stands at £13,000.

Students made a closer prediction, expecting to graduate with average debts of £12,203. However AIC warns that both parents and students failed to take top-up fees into account which will add £7,000 to post-university debt.

The study also revealed that student debt is making an impact on the career choices made by graduates. Some 40 per cent are looking for higher paid jobs to repay debt while 15 per cent have put plans for post-graduate study on hold to save.

Increasing numbers of students are also heading back home to their parents' house after graduation in an attempt to avoid further debt and start making repayments.

Annabel Brodie-Smith, communications director of AIC, explained: "The credit crunch and the rising cost of living will undoubtedly make it harder for parents to fund their children's university years.

"It's alarming that few of tomorrow's graduates or their families really comprehend the financial implications of top up fees and both have underestimated the amount of student debt they will face on graduation."