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Cut the coffees! By saving £4 a day parents could help ease the burden of university debt

  • Zopa reveals saving just £4 a day per child during school years could help parents save £27,750; enough to cover current university fees
  • Research comes ahead of 2019 A Level exam season starting and thousands of young adults heading to graduation with over £45,000 worth of debt
  • The FeelGood Money™ company is highlighting how parents could help their children prepare for their financial futures

Our latest research has revealed that parents could consider saving just £4 a day per child, over the 13-year period children are in school, to have a lump sum that would help their children tackle mounting university fees.

The research revealing the calculations of £4 per child comes ahead of this year’s A Level exam season that will see thousands of 18-year olds head off to university in September and embark on three years of education that could cost £27,750. 

With the average annual university course fee hitting £9,250 a year (£27,750 for three years) and three years’ worth of maintenance loans reaching between £14,500 – £18,700, most graduates will be leaving university with over £45,000 worth of debt. While most parents will want to help their children minimise debt as much as they can, helping out with such a sizeable sum is no easy task. The daunting levels of education costs have fuelled Zopa to suggest ways in which parents could help their off-spring financially ahead of the proud graduation day.

Zopa is recommending parents begin early with their savings: starting from year 1 of primary school. Counting the pennies this early on, maintaining the £4 per day per child, saving routine throughout their school education until the end of their A Levels, will ensure parents have sufficient funds ahead of university even starting.

While £4 a day each may seem small, it equates to £1,460 annually. Putting these savings into a higher interest investment product – such as a peer-to-peer (P2P) product like Zopa Plus with target returns of 5.2% – for a little over 13 years would amount to £27,750* to cover the costs of the education fees.

“Nobody likes being told to cut a cup of coffee out of their morning routine but it can make a huge difference that could allow you to help your child manage future debt,” said Andrew Lawson, Chief Product Officer at Zopa. “Thinking ahead and saving a small amount each day as soon as your child starts school is a great option to securing financial stability ahead of starting university, but we know this time scale isn’t possible for everyone. Putting aside just £4 a day each over a few years and investing it with Zopa Plus could help parents offer a greater degree of financial stability as their child embarks on further education.”

If you don’t have 13 years to save until your child graduates, there’s still time to make each saved pound count towards the total. There are of course other options such as Junior ISAs, but these have a lower annual investment cap (£4,368 vs. £20,000) and even the highest rate of return only reaches 3.5% annually. The table below shows the rate of return that you could achieve with a Zopa IFISA:

When you invest your money with Zopa, your capital is at risk.

*£1,460 saved annually x 5.2% target return each year = £27,554.37 after 13 years +

(£4 x 49 days = £196) = £27,750

A Zopa account cannot be opened as a joint account and must be in one person’s name. Full details about Zopa’s investment products can be found here.

Full calculations below: