"Ostrich" parents are sticking their head in the sand when it comes to providing for their children's future education, it has been claimed.

A new national study, commissioned by Royal Liver Assurance, says the Government's decision to introduce university top-up fees has done nothing to prompt most parents in the South-East to start saving to help their children with the costs.

More than a third (38 per cent) of these parents, all of whom were expecting their children to study at university, did not know how they would fund their child's education.

Under the top-up fee system, universities will be able to charge full-time dependent undergraduates up to £3,000 a year, with repayments starting when graduates earn £15,000 a year or more.

According to recent research, the average cost of raising a child from birth to university now stands at £164,000.

Royal Liver chief executive Steve Burnett said: "Given the worrying level of consumer debt in the UK and the shortfalls in pension and saving provision, it's surprising the Government is currently only offering a debt finance option to students through personal loans.

"It should explore the option of introducing attractive, tax-efficient schemes to encourage parents to save for their children's education over the long term. Although there are some schemes available that take advantage of special tax treatments, Gordon Brown should consider going further and switch the Government's focus from low-cost debt to savings plans for university costs.

"The Government and the financial services industry have to get people's confidence back and start to switch people's mindset from debt to saving. It's the only way to relieve the financial time bomb in this country, which has among the highest levels of debt in Europe."

Royal Liver offers a number of tax-exempt savings plans - see www.royal-liver.com or call 0800 092 9808.

The Southampton-based Foresters Friendly Society, one of the UK's longest-established mutuals, believes parents can help themselves by getting their children involved in saving. Chief executive Mark Rothery said: "The figure of £164,000 throws into focus the need to ensure your child understands the importance of saving for their future. There is little capacity at present for that education process to take place at school, so parents need to set a good example."

He offered five tips to help kids save: * Encourage: On your child's behalf, open a young savers account, where he or she can save as little as £5 a month * Motivate: Give incentives for saving - for example, offer to match every £1 of pocket money saved * Educate: Let children see the relationship between money and work by setting a number of chores to be done in return for pocket money * Make it fun: Buy or make a piggy bank * Set a goal: Identify a toy or game your child would like to have and explain how he or she could afford it by saving an amount of pocket money over a period of time.

Wednesday July 14, 2004