Australian parents are taking on extra work, sacrificing holidays and borrowing more to help pay the cost of their children’s university education, while students are spending several hours each week in paid employment to help keep up with expenses and improve their job prospects, new research from HSBC has revealed.
According to HSBC’s report The Value of Education – The Price of Success, 4 in 5 parents (85%) rely on their day-to-day income to support their child’s university education, with only 3% having a specific savings or investment account set up in advance to cover the growing costs of education.
Many Australian parents say they are making personal sacrifices to afford the average AUD17,1241 they spend on their child’s tertiary education. More than half (56%) of these parents say these costs have resulted in them reducing leisure activities like eating out or going to the movies. Additionally, 58% have taken fewer holidays and 31% have taken on extra hours at work and/or a second job to secure educational opportunities for their children.
In Australia, there’s a shortfall of around AUD33,207 between what parents contribute and what students say they spend towards their university education – with many students turning to part-time employment to fund their lifestyle and keep up with the costs.
More than 89% of Australian students work while studying, and for almost half (47%) this is out of financial necessity. On average, students spend 4.2 hours a week in paid employment, more time than they spend in lectures (2.9 hours), studying at home (3.1 hours) or at the library (2.0 hours). At the same time, most parents prefer their children concentrate on their studies, with 82% saying they plan to look after their child’s basic living costs to enable this.
When it comes to how students spend money at university, those surveyed say they spend roughly AUD2,940 on going to restaurants or ordering takeaways over the course of their degree, more than they spend on textbooks (AUD620). Students also say they spend an average of AUD2976 on entertainment and AUD1,668 on clothes and make up over the course of a degree.
Budgeting for the full range of lifestyle and education costs can be an expensive learning curve for students, with many turning to short-term borrowing, estimating they devote AUD2,037 over the course of their degree paying back fees from credit cards, personal loans and other debts.
University is often the first time many Australians are financially independent. Planning in advance and having an upfront conversation could ensure better financial outcomes for parents and students alike.
Almost a third of Australian parents (31%) wish they had started saving earlier for costs associated with their child’s university education. Many of these parents (47%) worry they will not have the financial resources to support their child’s education, and 42% who are contributing do not know how much they are spending on this significant investment.
Despite this, the value of tertiary education is still clear in the eyes of both parents and students, with 59% of parents with a child at university and 67% of students saying a university education is worth the money.
Katie Docherty, Chief Operating Officer for Retail Banking and Wealth Management, HSBC Australia
“With the employment landscape changing rapidly, education has never been more important than it is today. Australian parents know this and are clearly willing to go to great lengths to support their children financially with their tertiary studies.
“But the direct and indirect costs add up. Australian students are spending on average AUD50,311 over the course of their degree, with their parents chipping in more than one third of this amount.
“Being realistic upfront about the personal and financial expenses, and putting in place reasonable steps to manage these as a family can help avoid financial pressures and short-term borrowing, enabling students to stay focused on what’s most important at this time - studying,” Ms Docherty said.
HSBC BANK AUSTRALIA
In Australia, the HSBC Group offers an extensive range of financial services through a network of 44 branches and offices. These services include retail and commercial banking, trade finance, treasury and financial markets, payments and cash management and securities custody. Principal HSBC Group members operating in Australia include HSBC Bank Australia Limited (ABN 48 006 434 162 AFSL/Australian Credit License 232595) and The Hong Kong and Shanghai Banking Corporation Limited (ABN 65 117 925 970 and AFSL 301737).
1 Including postgrad