Education debt risk

Parents are risking plunging themselves into a debt spiral by funding their children's progress through education, it has been revealed.

Last year, £37m of personal loans were taken out in order to help pay school and university fees, as well as general education costs like uniform and equipment.

The figures come from Sainsbury's Finance, who indicate that on average, parents are taking out loans of £8,500.

Taking out that kind of loan increases the risk of financial problems and could lead to people needing to take debt management advice if they struggle to pay off what they owe.

Sainsbury's Head of Loans, Steven Baillie, is not surprised by the spending, as "the cost of education has been rising." The education aspect of CPI inflation increased by an above-average 5 per cent in the 12 months to February 2010.

Kevin Still, director of Atlantic Financial Management, says: "Trying to manage your own household debts can be hard enough, but when you have to fund adult children as well then this can be crippling and create a debt spiral. We see many middle aged couples that are in debt problems because they are assisting siblings and elderly parents."

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