How should you fund your child’s university education as part of your wider family wealth plan?
What you need to know
- Student loans work differently from conventional borrowing, so the decision is not simply about avoiding debt.
- For many high-net-worth families, university funding is less about affordability and more about timing and structure of wealth transfer.
- Grandparents can play a valuable role, with funding potentially forming part of an inheritance tax and estate planning strategy.
- Decisions should be considered within a broader intergenerational wealth plan, including how and when to pass on capital.
Student unions, instant noodles, napping through 9am lectures. For many parents and grandparents, these are familiar university memories. Today, however, the defining feature for many families is the cost.
By the time tuition fees and living expenses are combined, a three-year degree in the UK can cost as much as £70,000.1
As A-level results day approaches, conversations in many households will begin to focus not only on university choices, but also on how best to fund them.
For high-net-worth families in a position to provide support, the question is rarely whether they can help, but how and when that support should be structured. Should university be fully funded, partially supported, or treated as one of several opportunities to pass on wealth?
At first glance, funding costs upfront may seem straightforward. Providing a debt-free start can feel like a natural extension of broader financial support.
However, the decision is not solely about removing debt. It is about determining how best to deploy family wealth across generations, and at which stage that capital can have the greatest long-term impact.
Why the dilemma?
If student loans operated like conventional borrowing, the decision would likely be simpler. But they do not.
Student loans function differently, which makes the decision less about avoiding debt and more about understanding how the system interacts with income and long-term financial planning.
How student loans are different
Unlike a mortgage or personal loan, student loan repayments2 are based on income rather than the amount borrowed.
Graduates repay a percentage of their earnings above a certain threshold, meaning two individuals on the same salary may make identical repayments even if one borrowed more.
Loans are also typically written off after a set period and do not form part of the borrower’s estate.
For some families, this reframes the question. Rather than viewing student debt in conventional terms, it becomes one factor within a wider intergenerational strategy.
Looking beyond university
One way to approach the decision is to consider university funding in the context of broader wealth planning.
For high-net-worth families, capital allocated to university could instead be deployed at other key moments, such as property purchase, entrepreneurial ventures or family transitions.
Allowing assets to remain invested over time may also create the potential for growth, which in turn can support future generations in a different way.
This does not mean that funding university fees upfront is the wrong decision. Rather, it highlights the importance of aligning that decision with a structured plan for transferring wealth across generations.
How grandparents can help
Parents are not always the only contributors. Many grandparents choose to support grandchildren during their lifetime, allowing them to see the impact of their wealth directly.
University funding often provides a natural opportunity to do this.
Importantly, such support can also form part of a broader inheritance tax planning strategy.3
For example, the annual gifting exemption allows individuals to give up to £3,0003 each tax year without it forming part of their estate.
Larger gifts may also fall under Potentially Exempt Transfers. These are gifts that, provided the individual survives seven years, should fall outside of their estate for inheritance tax purposes.
For some families, contributing towards school or university fees can therefore be structured as part of a longer-term approach to passing on wealth efficiently.
Grandparent involvement can also provide a useful starting point for wider family conversations about wealth planning, helping to set expectations and create a shared understanding across generations.
Involving advisers
Deciding how to fund university is ultimately a personal choice, but one that benefits from being considered alongside a broader wealth strategy.
At Brown Shipley, our Client Advisors work with individuals and their families to develop long-term plans that reflect both current priorities and future ambitions.
If you would like to discuss how education funding can form part of your wider wealth strategy, you can contact a Brown Shipley Client Advisor.
FAQs
Should I pay for my child’s university or use student finance?
There is no single answer. For many high-net-worth families, the decision is less about affordability and more about when wealth is most effectively transferred across generations.
Can university funding form part of estate planning?
Yes. Funding education may sit alongside other strategies for passing on wealth, including structured gifting and longer-term planning.
Can grandparents help pay for university?
Yes. Grandparents may contribute directly, and in doing so, may also incorporate these contributions into inheritance tax planning through exemptions and longer-term gifting strategies such as Potentially Exempt Transfers.
How should university funding fit within a wider wealth plan?
University is often one of several opportunities to support the next generation. Decisions are typically most effective when considered as part of a broader intergenerational strategy rather than in isolation.
Important Information
Information correct as of 6 August 2026.
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