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Millions of parents and grandparents are making financial trade-offs to support their children and grandchildren’s university costs, with many expecting to delay retirement, cut pension savings or accept a lower standard of living in later life, according to new research from Rathbones.
A survey* of 1,010 parents and grandparents who are funding education costs for children or grandchildren found over one in four (26%) believe they will retire on a lower standard of living than originally planned, while 24% expect to delay retirement and 17% anticipate reducing pension contributions as a result of funding university education costs.
Among those expecting to delay retirement, more than two-fifths (43%) believe they will need to work for at least three additional years, including 11% who expect to postpone retirement by more than five years.
Rebecca Williams, Financial Planning Divisional Lead at Rathbones, says: “It’s completely understandable that parents want to give their children the best possible start in life - and for many, that still means university. But it shouldn’t come at the cost of their own financial security. Education is a worthwhile investment, but it’s important to be clear on the long-term cost and to balance that with your own plans.
“We often hear from clients who are in a strong financial position and want to do as much as they can for their children but still worry about the long-term impact on their own wealth and retirement plans.
“Education can absolutely be a worthwhile investment, but it’s important to be clear on the long-term cost and to balance that with your own plans.”
Perceived value of university becomes more contested
The findings come amid renewed debate around the value of university education and the challenges facing young people entering the workforce. A recent government-commissioned review showing the number of young people not in employment, education or training at a 12-year high has intensified scrutiny on university education.
Despite this, attitudes towards higher education appear increasingly divided. While 52% believe most well-paid jobs still require a university degree, many are weighing this against mounting concerns about student debt (42%), the appeal of vocational routes (41%), and weaker graduate prospects (31%).
Rebecca Williams adds: “The reality of today’s job market is that a degree on its own isn’t a guarantee of success. With student debt now so significant, it can weigh on young people for years and start to shape the choices they’re able to make later in life. That said, from what we see with clients, many families still view university as an important stepping stone - they’re just being a bit more thoughtful about when and how they provide financial support.”
Student debt concerns driving parental trade-offs
The findings reflect growing concern among families about the long-term impact of student debt, particularly as the student finance system produces uneven outcomes depending on earnings.
Separate Rathbones analysis shows graduates are not affected equally, with middle earners often facing the highest overall repayment burden. Those starting on salaries of around £45,000 to £50,000 can end up repaying more than anyone else in cash terms, as they remain in the system the longest and interest continues to build over decades.
Charlie Newsome, Senior Investment Director at Rathbones, says: “Many parents would rather work a few years longer themselves than see their children start their careers under the weight of substantial student debt. Rising tuition costs and higher borrowing costs have only strengthened the desire among families to provide as much support as they can.”
Balancing support with long-term financial security
Charlie Newsome, says: “Parents shouldn’t feel they have to choose between their children’s future and their own. With enough time, a disciplined savings plan and the right mix of investments, it is often possible to make meaningful progress towards both goals simultaneously.
“The most successful financial plans are those that balance both objectives from the outset, rather than sacrificing one for the other.”
