With students settling back into school and university, new research from Paragon Bank has uncovered the extent to which grandparents are supporting their grandchildren financially through education.
Almost a third (32%) of grandparents are contributing towards university or school costs, with the majority (76%) supporting those at university and two-thirds (68%) helping those still at school.
Paragon’s survey of over 1,000 grandparents found the most common form of support (70%) was helping with general expenses associated with education, such as rent, food and books for those at university and books, clubs and uniforms for those attending school.
Over half (57%) said they contributed to school fees, with 40% to university tuition fees.
Drivers and cost
Seven in 10 grandparents say they want to support their grandchildren to improve their career opportunities, whilst 42% said that they didn’t want their grandchildren to leave university education with large debts.
A further one in 10 say that they are providing cash for Inheritance Tax purposes, whilst 8% said it was a family tradition for older generations to support younger family members through education.
A third of grandparents provide between £1,000 and £4,999 per year, with 16% providing between £5,000 and £9,999. Meanwhile,14% support their grandchildren’s education by over £10,000 annually.
Financial impact
When it comes to assessing the impact of supporting grandchildren with their own finances, 53% said that it had no significant impact, whilst 37% said that the costs were manageable.
Meanwhile, 8% admitted that the financial support placed a strain on their own finances, with 1% claiming it to be a significant financial burden. Over one in 10 (12%) said that they had to make lifestyle changes to accommodate the financial support.
Of those 12% who made lifestyle changes, 85% reduced personal spending, 18% found work, 13% sold assets and 5% downsized their home.
Derek Sprawling, Paragon Bank Savings Managing Director, said: “Financially supporting grandchildren with their education can be rewarding for grandparents as they can use the wealth they have built up to help the younger generation get a step up.
“However, doing so can be a financial burden and grandparents need to ensure their cash is working as hard as possible for them to deliver the best returns.”
