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Teenagers underestimate cost of university

By Staff
Google Oneindia News

LONDON, July 28 (Reuters) Teenagers vastly underestimate the cost of university, and stand to graduate 5,000 pounds more in debt than expected, a survey shows.

Students left university last year with an average 13,252 pounds of debt, according to the National Union of Students.

However, would-be students think they will rack up debts of only 8,000 pounds by graduation, while parents estimate it to be under 10,000 pounds, research by the Association of Investment Companies (AIC) shows.

Daniel Godfrey, director-general of the AIC, said: ''Whilst it's important to remember the many positives of a university education, it is a concern that so many parents and students still underestimate the true level of graduate debt.

''Unless parents and students start to really comprehend the financial implications of going to university, the shortfalls faced by tomorrow's students could put them in serious financial difficulties right at the start of their working lives.'' However, the estimates are more realistic than a year ago.

Potential students put expected debt at 6,190 pounds last year, according to the AIC annual survey, while parents put the figure at 6,849 pounds.

Some 93 per cent of parents say they are willing to make sacrifices so their children can attend university, this year's poll of 4,000 people shows.

Almost 60 per cent would forego a new car, 53 per cent would sacrifice their annual holiday and 36 per cent would forfeit an early retirement.

Just over a quarter of parents expect to stump up most of the cash themselves, no matter what the cost.

Students are shouldering the financial burden too.

Almost a third of prospective students expect to live at home to save money and avoid extra debt.

The same proportion plan to work their way through university, while more than a quarter say they will take out a loan to fund their studies.

Meanwhile, the fourth annual graduate first-time buyer report by Scottish Widows Bank highlights the difficulty graduates have in getting on the property ladder.

Some 56 per cent of graduates surveyed are yet to buy their first home -- 3 percent higher than last year -- and a quarter of people who graduated 10 years ago are struggling to get on to the housing market.

A total 70 per cent cite unaffordable housing as a major obstacle, 58 percent say they do not earn enough to get on the housing ladder and 27 per cent cannot save for a deposit.

The average graduate first-time buyer deposit is 16,666 pounds, according to the report.

One in 10 say having to pay off student loans prevented them from buying their first home and one in eight cited other debts, such as credit cards and personal loans, as a barrier.

Almost one in 10 graduates do not think they will ever be able to buy a house.

Richard Clark, head of product development and marketing at Scottish Widows Bank, said: ''Property prices and inflation are continuing to rise, but starting salaries have not moved in line with this.

''First-time buyers are struggling to save for that deposit, and recent interest rate rises are acting as a further deterrent.

''Owning a home is likely to remain a pipe dream for many.'' YouGov surveyed 2,523 people who graduated in the last 10 years.

Reuters BJR VP0755

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