Parents Turn to Kids’ Education Funds to Pay Bills
Published: 1 August 2011 By Peter Thompson 1 Comment
Increasing financial pressures are causing more parents to resort to money originally set aside for their children’s education.
The rising cost of living and the growing financial burden on many households is driving parents to more desperate measures – with a new study showing that a growing number are raiding their children’s education funds to make ends meet.
In a poll of 2,016 adults, asset management firm Schroders found that 6% had withdrawn money originally put away for education. If extrapolated across the UK, the findings show that around 2.7 million people are likely to have done this.
Typically, the amount withdrawn from these funds has been just over a third of their value, with only one in five sets of parents in a financial position to replace the money they’ve taken out.
As for the reasons for doing this, 56% of those dipping into their savings cited the rising cost of living as their reason for doing so. 19% used the money to pay for a holiday, while a further 15% used it to buy a car.
In spite of the squeeze on household finances, £12.4 billion is still being spent annually by more than 2 million people on school fees, private tuition, college and university. A proportion of this is funded by loans.
But the situation could become worse – Schroders is warning that less than a quarter of those still paying education-related fees have money put aside in long-term investments to help meet these costs.
Managing director of Schroders’ UK intermediary business, Robin Stoakley, said: “Many of those who are already paying for private education are facing some tough decisions over the summer. Some have decided to reduce the amount spent, while others have had to withdraw children from private education.”
Moneyhighstreet says: “This is yet another financial hurdle facing households – and it’s likely to get worse as higher tuition fees take effect at universities and further pressure is put on parents to come to the financial aid of their children.
“For younger children at private schools, money can be saved by switching from boarding to day places or transferring to cheaper schools – but disruption to your child’s education is not a decision to be taken lightly. Where possible, cut back on other expenditure before taking the decision to dip into education funds.”