New poll of students and parents reveals financial challenges facing UK students during the first term

Over half (51%) of students spend their student maintenance loan before the end of the first term

  • Over two thirds (68%) of students admitted to needing financial support from their parents
  • One in three students expect to “never” pay off their student loan
  • A quarter of parents (25%) have never spoken to their children about managing their finances at university


As students across the UK are primed to start the university year, new research from the Institute of Inertia –a partnership between the University of Sheffield and – has revealed the extent of their spending habits, with a staggering one in ten (11%) set to spend their student loan (the equivalent of £2700*) within the first two weeks of term; more than half (51%) to spend it all before the end of term; and a quarter (28%) to fall into their overdraft.

The new survey polled students and parents of students currently at university and found that, despite the appearance of their bank balance by the end of the term, students are surprisingly self-assured when it comes to their financial management skills.

In fact, 89% stated that they feel confident when it comes to managing their student loan, which they receive three times a year (once a term) to cover their living costs. However, a large majority of students said that the lump sum student loan deposit wasn’t the ideal format, with four in five (80%) stating that they would rather receive this payment in smaller instalments throughout the term.

To counter any lack of financial management, the same poll reveals that students are relying on family ties to help get them through tight times during the term, with two thirds (68%) turning to the ‘Bank of Mum and Dad’ for financial support.

While this parental financial support might provide temporary relief to stretched students, the difficulty many are having with managing their finances - resulting in a range of subsequent financial issues - could stem from a lack of basic money skills. While a quarter (25%) of parents admitted to never having spoken to their children about managing their finances before going to university, over half (55%) stated that their child/children would benefit from expert financial guidance before going to university.

Dr Thomas Webb, a social psychologist at the University of Sheffield and Chair of the Institute of Inertia, said:

This research clearly points to the challenges that students encounter when managing their finances whilst at university, with more than half of students spending their loan before the end of term. This finding likely attests to the often-cited 'gap' between peoples' good intentions -  in this instance, to make their money last – and action.

“However, the survey also points to the need for strategies to support students, with University often the first time that they gain financial independence. The Student Loans Company's policy of providing the loan to students for the first term in one lump sum - rather than in instalments, which four fifths of students said they would prefer - no doubt contributes to the difficulties that students face in making their money last.”

When it comes to sensible student spending habits, parents are optimistic that “studying comes first”, with more parents believing that their child spends their student loan on books (34%), rather than booze (31%).

However, over a quarter (29%) of parents across the UK believe that their children have lied to them about what they are spending their student loan on (just 19% of students admitted to lying to their parents). Highlighting a difference in opinions between the heads of the household, almost a third (32%) of dads thought that their child/children had lied to them about their university spending, compared to a quarter (26%) of mums.

Looking beyond university, the survey also found that students are more pessimistic than their parents about being able to pay off their student loan; one in three (29%) thought that they would “never” pay off their student loan – a possibility that just 12% of parents agreed with.

Jody Baker, Head of Money at, comments:

“For many new students, their first student loan deposit is likely to be the most money they have received at one time and while a majority say they feel confident managing their finances, their bank balances at the end of the term or the need to rely on the ‘Bank of Mum and Dad’ state otherwise. What’s more worrying is that parents think that their children would benefit from financial advice yet many aren’t leading conversations in this area – a small move that could make a big difference to how money is managed during term time.”