Planning for university costs

How to fund university for your children

A-level results are in, and the aisles of IKEA are full of soon-to-be university students getting kitted out with the basics for their first stint of living away from home.

With nearly 28% of students achieving A or A* grades this year, many families are now making decisions about the future. For some, this will mean heading to university, while others may consider apprenticeships or alternative routes into work. With tuition fees at record levels and living costs continuing to rise, it is important to think carefully about how to fund university for your children and how to keep all options open.

How student loans work

For many families, student loans will form part of the funding picture. Unlike commercial debt, repaying student loans is income-contingent. Graduates only begin repayments once they earn above a set threshold (£25,000 a year at present), and any balance remaining after 40 years is written off. This system means loans function more like a graduate tax than traditional borrowing, and repayments flex with earnings. Understanding this structure can help parents and students feel more confident about relying on loans rather than stretching family budgets to cover tuition fees in full.

Helping your child build good money habits

Budgeting is one of the most useful skills a young adult can take to university. Breaking spending down into weekly amounts makes it easier to manage, while banking apps allow students to separate their money into different pots for essentials, discretionary spending and savings. Allocating a weekly amount for social activities also reduces guilt and makes money management feel realistic.

Lifestyle choices can make a big difference: cooking at home, borrowing textbooks from libraries, and buying second-hand clothes can all help funds last longer. Encouraging these habits gives students the confidence to manage their money independently.

Saving ahead of time

If the university years are still a little way off for your children, then it is worth planning ahead. Alongside loans and budgeting, many parents look to set money aside in advance to ease university costs. Tax-efficient savings options, such as Junior ISAs or designated investment accounts, can provide a pot of money to draw on when the time comes. Even relatively small, regular contributions can add up over 18 years. This approach can give students a financial cushion when they first leave home, reducing the need for overdrafts or high-interest borrowing.

Apprenticeships and alternative pathways

While university remains a popular choice, apprenticeships are now firmly established as another valuable route. Degree-level apprenticeships allow young people to earn a salary, gain workplace experience and study towards a recognised qualification without taking on tuition fee debt. For families looking at the cost of higher education, apprenticeships can provide a compelling, debt-free alternative that leads directly into a career.

Planning for flexibility

Whether the choice is university or an apprenticeship, the best approach is to keep plans flexible. Understanding how student loans work, encouraging sensible budgeting, and saving what is affordable ahead of time all help provide options. With a variety of routes into work now available, financial planning can give school leavers the freedom to follow the path that suits them best, without cost being the deciding factor.