Grandparents using property wealth to help grandchildren through university
Some (11%) homeowners over-55 are looking at accessing property wealth to help their grandchildren through university, equity release adviser Key has found.
The ‘Bank of Gran and Grandad’ is looking at accessing this wealth through downsizing, selling other properties, remortgaging and equity release.
Will Hale, chief executive at Key said: “The over-55s are a generous generation with many looking to help their loved ones, especially when it comes to something as important as education.
“The cost of higher education can seem daunting with students leaving university with average debts of £50,000 as well as their degrees.
“While some of these student loans will eventually be written off, many successful graduates will find that they are using their hard earned cash from their early years of employment to make these payments rather putting aside money for their first home or other long term goals.
“Retired homeowners are mainly using savings to help fund university fees but are also turning to their property wealth using alternatives such as equity release to support families.
“When making any significant financial decisions good specialist advice is key to ensuring older homeowners use their property wealth in the best way to support their own needs and aspirations and those of their families.”
More than one in three (35%) grandparents have already helped or are planning to help fund their grandchildren through university.
Nearly four out of five (79%) grandparents regard the cash as a gift while 18% expect students to only repay some of the money, whilst 3% expect their money back.
Graduates are estimated to leave university with average debts of £50,000 which they will start repaying once they earn above £25,725.
The government lends more than £16bn a year through the Student Loans Company and more than £121bn of loans are currently outstanding.