Nearly eight in ten parents will rely on their cash savings to fund their child’s university costs and a further 20 per cent could be putting themselves at financial risk.

That was the conclusion of a report by the Association of Investment Companies, which revealed that parents are underestimating the amount of debt graduates will leave university with.

Parents think that their child will graduate from university with a debt of £23,000 on average, the research indicated.

However, students are leaving university with an average debt of £44,000 according to Sutton Trust, which also found that 75 per cent of graduates will still be paying off their student debts in their 50’s.

The report by the AIC has also found that a large number of parents are significantly overestimating the amount needed to open an investment savings scheme

Parents thought they would have to pay an average amount of £81.51p per month, in order to invest monthly in an investment saving scheme.

However, the minimum amount required to invest in a children’s investment savings scheme is actually £25.

AIC’s communications director, Annabel Brodie-Smith, said: “The research suggests that many parents massively underestimate the amount of student debt their children will graduate with. Parents are willing to make huge financial sacrifices to help their children through university and many grandparents are sharing the financial burden.

“It’s worth parents planning ahead, if they can regularly save some money for the long-term in an investment company saving scheme.

“Parents think they need large sums of money to do this, but investment company saving schemes start from as little as £25 a month. Investment companies spread investment risk by investing in a diversified portfolio of assets on your behalf.

A monthly investment of £25 over 18 years in the average investment company has grown to nearly £13,000, which would cover almost a third of the costs - a huge help. Over the same time period, a £50 per month investment has grown to £25,830, showing the benefits of a little bit of forward planning.”