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As MPs accuse successive governments of mis-selling student loans and question whether students were given a clear picture of the long-term cost of borrowing, new research from Rathbones suggests parents and grandparents are increasingly stepping in to fund higher education costs themselves.
Rathbones' research found that nearly seven in 10 (69%) parents expect to cover at least half of the total cost of university, with 15% expecting to pay all or almost all costs themselves, 23% expecting to cover most costs, and 31% anticipating an equal split between student loans and parental support.
The burden is not falling on parents alone. Nearly two-thirds (65%) of respondents say grandparents contribute, or are expected to contribute, towards education costs either regularly or occasionally, highlighting the growing role of intergenerational wealth in helping fund education.
The research comes as the Treasury Committee concluded that comparisons between student loan repayments and mobile phone contracts amounted to "mis-selling" and called for greater transparency around the long-term financial implications of student borrowing.
Charlotte Kennedy, Chartered Financial Planner at Rathbones, says: “Funding university is increasingly becoming a family affair, with the Bank of Grandma and Grandpa stepping in when the Bank of Mum and Dad is feeling the strain.
“We regularly hear from clients who are concerned that younger generations are being squeezed from every direction. University costs continue to rise, while career prospects after graduation are becoming less predictable as AI reshapes the employment landscape. Against that backdrop, many families still see higher education as an investment in opportunity and are keen to help where they can.
“For grandparents in particular, contributing towards university fees can be a meaningful way to support the next generation, helping to reduce or even avoid the burden of student debt that might otherwise follow them well into adult life. It can also be an effective way to pass on wealth during their lifetime, allowing them to see the positive impact of their gift firsthand.”
Student debt concerns are reshaping attitudes towards university
The survey also suggests growing unease about whether university represents good value for money in an era of rising student debt.
Nearly one in three (30%) respondents believe student debt has made university less attractive than it used to be, while 32% believe apprenticeships and vocational routes are now equally valuable alternatives. Meanwhile, 23% believe graduates face weaker job prospects than previous generations.
While parents remain broadly supportive of higher education, many are becoming more selective about when the financial commitment makes sense. More than a third (34%) believe education is only worth the cost in specific circumstances, while 42% say it remains worthwhile even if it requires significant financial sacrifice.
Charlotte Kennedy, says: "There is still strong belief in the value of a university education, but families are becoming more pragmatic about the financial realities. Rising debt levels, changing career pathways and the growing appeal of apprenticeships are prompting many parents to take a closer look at whether university represents the best route for every young person.”
Growing concern about the long-term cost of student debt
Families' willingness to provide greater financial support may reflect growing concerns about the long-term impact of student borrowing. Previous analysis by Rathbones found that graduates on middle incomes can end up repaying more in cash terms than higher earners because they remain in the student loan system longer and accumulate interest for decades.
The analysis identified a "student loan danger zone" for graduates earning around £45,000 to £50,000. Under current Plan 2 rules, a graduate starting on around £47,000 with a £50,000 student loan could repay approximately £136,000 over the life of the loan - almost three times the amount originally borrowed. The finding challenges the assumption that the highest earners are necessarily the hardest hit by student loan repayments.
