In just 12 months students cost of living has gone up £42.56 per month

The monthly cost of being a student has risen by £42.56 in the last twelve months according to analysis* by Family Investments, a leading children’s saving provider. Students have seen their monthly living costs increase from £752 twelve months ago to £795 today.

Since last year, the cost of student life has risen from £9,031 to £9,541 which works out as an extra £510** over the year.  This increase does not include the new university tuition fees, adding to financial concerns of students and their parents.

In 2004, when figures on student living costs became available, the monthly cost of living was £561, since then students have seen living costs rise by 34%, an annual increase of over 5% a year.

Rent is the biggest single expense and the average student currently spends £163 a month on accommodation, up slightly from £156 a year ago. Monthly expenditure on food has increased by 38% since 2004 rising from £44 to £65. Other costs have also increased significantly, such as clothing and recreation, up by 10% and 11% respectively over the same period – making the monthly costs £40 and £56 today.

Despite increases across the majority of categories, there has been a reduction in costs of communication, which includes mobile phone costs, falling from £23 a month in 2004 to £19.62 today.

While the issue of tuition fees dominates current discussion of student finances, if the cost of living continues to rise at current rates, those students starting a degree in 2011 may see annual costs hit £11,253 by the time they graduate in 2014. The increase of £1,712 compared against today’s costs, would be a significant addition in its own right.

Kate Moore, Head of Savings and Investments at Family Investments said: “As A level results are released this week, students face an anxious wait to find out how they’ve performed in their exams, but for parents the impending cost of university is likely to be just as big a worry. Over the last six years, student living costs have risen by more than five per cent each year, significantly ahead of RPI in the same period.  With increased tuition fees now on the horizon, the total cost of a degree and the economics of student life look set to change dramatically.

“Young adults face unprecedented financial commitments and the steadily rising cost of living is yet another factor they will have to consider as costs such as food creep up. The consequences of increased tuition fees and living costs are as yet unknown but we anticipate that we will see a greater proportion of students going to university near their home town so that they can continue living with parents and possibly taking on part time jobs.

“For the average family covering these costs is likely to be a significant challenge and parents who want to give their child a helping hand will have to start saving early.  It is more important than ever that families plan their finances in advance and set up saving measures as early as possible.”

One of the best ways to start saving early is through the Junior ISA, a new tax efficient savings account for children available from the 1st November. Family Investments will offer a Junior ISA that is accessible to everyone who wants to start saving for their children’s future.

“Parents that are fortunate enough to be able to save the equivalent of the current Child Benefit allowance of £81.20 each month, could potentially build a sum of £29,300*** after 18 years. This is a significant sum that could pay for a decent slice of their child’s living costs or cover their tuition fees.”

* Based on analysis of ONS Family Spending Reports from 2004 – 2011. The analysis looked at the increasing/decreasing cost for each of the various spending categories and overall cost of living for students. The average increase/decrease in cost was taken to calculate the cost in 2011 and 2014.

** Annual figures assume the student pays costs such as rent 12 months of the year

*** Based on an annual growth rate of 7%