Both students and their parents largely underestimate the cost of going through university, a survey by the Association of Investment Companies (AIC) found.
Although 78 per cent of parents think the credit crunch will make it harder to support their children financially through university, most do not even realize how much they will have to pay until their child finally graduates because they do not take top up fees into account.
While students think they will graduate on average with £12,200 of debt, the parents' estimates were way out at £9,681 – the reality is that top-up fees will cost students an extra £7,000 on top of their debt, and students graduating next year will therefore owe £20,000 when they leave university.
The increased fees force many students to change their career choices or living arrangements altogether, with 40 per cent stating they would rather accept a better paid job than follow their true vocation in order to repay their student loans
15 per cent of graduates said that they had postponed their planned postgraduate studies until they could better afford them, while a further 10 per cent had scrapped them altogether. More and more students also find they have to stay at home and live with their parents in order to save money, instead of moving to a different city or living in student digs.
Nearly a quarter of students expect that it will take them more than 15 years after their graduation to repay their student debts
, and a further 47 per cent believe they will need at least 10 years to repay their student loans.
Universities UK (UUK), the association of vice-chancellors, insisted that the introduction of higher fees had no influence whatsoever on the number of course applications.
"Despite various changes to the system, there continues to be real growth in the number of applications and a pattern of stability in recruitment." UUK stated in a report.
By contrast, the general secretary of the University and College Union, Sally Hunt, said: "There has been no increase in students from non-traditional backgrounds, despite vast sums of money being spent on encouraging them to apply."
"We appreciate the financial strain many parents are under," Annabel Brodie-Smith, communications director of AIC (Association of Investment Companies), said, "but if it's at all possible to plan for the future, saving for your children for the long-term from an early age, can give them a financial head start in life.
She added: "The sooner you start investing for your children, the better chance of greater returns. Investment
, companies can be an ideal way for parents to tap into the long-term potential of the stock market. An investment of £50 a month in the average investment company over the last 18 years has grown to £24,129."
© Fair Investment