With exams finally over and revision, for the time being at least, sidelined, most A-level students will, or should be, chilling out and preparing to enjoy long, hot summer days.
There’s still plenty of time to relax before exam results are published in August, at which point futures – or at least the next 3-4 years – become clearer as A-levels and the final vestiges of school life are superseded by degree courses as the latest cohort of 18 and 19-year-olds head off to university.
University life is an eye-opener for most first year undergraduates, almost all of whom find themselves parachuted into a world where, possibly for the first time, they’re responsible for every aspect of daily life, from getting up on time and down to a hall of residence breakfast, to ensuring there’s enough cash left over to enjoy their university’s buoyant social scene.
Of course, getting in to university is just the first piece of the higher education jigsaw. It’s at this point that tuition fees and other outgoings, such as accommodation, food, books and a host of additional ‘extras’ must be paid for.
It never used to be like this. The 1962 Education Act introduced legislation which opened the door for the brightest students; almost overnight, attending university became a realistic goal as the state accepted liability to pay all domestic students’ tuition fees and provided means-tested living grants to eligible individuals.
How could they afford to do this? In short, fewer people attended university. In the 1950s,an estimated 3% of 18-year-olds went to university; by the end of the 1970s, the figure had risen, but only to 8%.
Today, an estimated 36-40% make it to the dreaming spires. Three years later, an accompanying, eye-watering, tuition fee debt is almost guaranteed.
Ever since they were introduced by Tony Blair’s Labour government in 1998, university tuition fees have been a bone of contention, though this hasn’t stopped their inexorable rise. In fact, over the last quarter century, they have surged more than nine-fold. Students hoping to make it into university for the 2026-27 academic year face a starting bill of £9,790. Add in living expenses and it’s little wonder that by the time they graduate from university, young people in their early twenties have accumulated average tuition fee and other debts totalling more than £53,000. Hardly the ideal way to start working life.
Understandably, students worry about such levels of debt. Sure, we often hear that ultimately the government will write off all student loans, but given the state of the UK’s misfiring economy, there’s absolutely no sign of that happening soon. Hidebound with what most 22 or 23-year-olds consider enormous debt, it’s hardly a surprise that, as they’re compelled to repay it, many cannot make it onto the property ladder until they’re well into their 30s or even 40s.
As tuition and other university-related costs have soared over the last two decades, so older generations, those with plenty of value within their homes, have stepped in to help. It’s a trend likely to gather pace over the foreseeable future, ostensibly because many middle-aged, former university students, feel they have an obligation to assist.
Equity release has proved a convenient, straight forward way for parents and grandparents to help family members get through university without being saddled with debts could take decades to repay.
The equity release process enables homeowners aged 55 and over to free up some of the accumulated value in their home and receive a tax-free lump sum to use as they wish. A large proportion of older folks use this money to fund a family member through university, effectively paying all or part of their tuition fees, so relieving them of the enormous pressure of debt.
There are, as you might expect, strict rules governing this increasingly popular means of accessing the wealth built up in homeowners’ property. They’re designed to protect owners and ensure that when they take out a lifetime mortgage, for instance (the most popular method of equity release), there are no contractual repayments to make.
The rules also ensure that those taking out a lifetime mortgage continue to own their home until they and their spouse/partner either dies or moves into permanent, long-term care.
Next month, A-level results will determine the immediate future for tens of thousands of younger people. Congratulations will be extended and yes, tears will be shed. In the aftermath of exam results, few of those preparing to embark on the most life-changing experience of them all and leave for their degree courses are unlikely to devote too much time to worrying how it’s all going to be paid for; a prevailing sense of euphoria and achievement will delay such thoughts for the time being.
However, the time will soon come when university education costs must be addressed, which is why thousands of homeowners who know a family member in a similar position are actively considering raising funds by taking out equity release.
