Should you pay your (grand)child's university fees?

What is the cost of university today?

In many countries, university is fast becoming a ‘luxury’ choice, with overall costs for a three- or four-year degree course on the rise. Even if the government subsidises the direct costs, the additional costs surrounding such an education can impact families.

Some may argue that there are other more cost-effective ways to learn, develop skills and lay the foundations for a successful career than a ‘luxury’ university experience.  

If it is on the educational agenda though, the cost of university is something that cannot be ignored or avoided. It has to be paid, one way or another; for example by a generous supporter, a scholarship, or taking out a student loan.

How much does it cost to get a degree?

There’s no getting away from the fact that university is a huge sum of money. Even with government assistance in many countries, annual tuition fees make up the bulk of the costs but there are the costs of living, which fluctuate depending on where you attend university. There is also the issue of lost income by attending university and not being in the workplace.

For many students the only way to meet these costs is with a student loan to fund tuition and other expenses. The amount may vary widely depending on where you live, study, and may be based on your family’s income.

Should I pay my child’s university fees?

If you have the means to help out financially, the decision of whether to pay your child’s tuition for them is a tricky one. Many parents and grandparents who can afford to, might feel that they should – they may feel that they leave their child or grandchild setting out on adult life with a debt that will just keep growing until they finish their course, start working, and start earning enough to start paying it off.

But, while being in a fortunate enough position financially speaking to step in and pay their way may seem the obvious solution, it might not be the best. A lot of that depends on how quickly they are likely to clear the debt, if at all. Some student loans may be written off a certain time period after the first payment was due to be made.

Two factors to consider when it comes to your decision to pay, or not, need to be:

1. The chance that they won’t have earned enough within the repayment time period after they graduate to repay the loan in full.

2. Whether that money you would use to pay their fees could grow at a rate that far exceeds the student loan interest rate.

Whether they end up going to university, or not, and instead start a business or travel the world, knowing that you have provided them with a nest egg with which to achieve their dreams will give you peace of mind.