Access to higher educational opportunities is increasingly dependent upon family wealth, says Rathbones.
A study conducted by the wealth manager surveyed over a thousand parents and grandparents who currently contribute, or expect to contribute, towards education costs. It found more than eight in 10 (81%) believe rising education costs are making life chances increasingly dependent on the financial resources available within a family.
Nearly two-thirds (65%) say grandparents contribute, or are expected to contribute, towards education costs. One in five grandparents who provide support say they cover most or all university costs, including 7% who fund virtually the entire expense of higher education.
Six in 10 (59%) say family support is combined with student borrowing, either through modest contributions (31%) or a roughly even split between loans and family funding (28%).
Malvee Vaja, chartered financial planner at Rathbones, said: “The reality is that going to university often comes with a significant financial commitment. The Bank of Mum and Dad has long helped young people navigate these costs, but we are increasingly seeing the Bank of Grandma and Grandad play an important role in funding educational opportunities.”
Rathbones said its research suggests grandparents’ support is driven by more than a desire to help younger generations succeed. More than two-thirds (69%) say inheritance tax considerations influence decisions around education funding, including 25% who describe tax planning as a major factor. Almost one in three (31%) believe educational gifts should be viewed both as a way of supporting family today and as part of a wider estate planning strategy.
The findings come ahead of planned changes that will bring unused pension wealth into inheritance tax calculations from April 2027, prompting many families to reassess how and when they pass wealth to future generations.
Vaja added: “The Bank of Grandma and Grandad is no longer just helping younger generations onto the property ladder. Increasingly, it is helping fund education too. Many grandparents tell us they would rather provide support when the impact is immediate and visible than leave a larger inheritance later.”
Main image: igor-lolatto-TdwYsTmA2Bc-unsplash
