Today's students and their parents have little idea of the costs of attending university, according to research published today by the Association of Investment Trust Companies (AITC), and consequently have wildly inaccurate estimations of debt on graduation.

The study into attitudes towards debt and university costs reveals that many students and their parents are blind to the actual cost. Just under half of all students (47%) and a third (33%) of parents estimate they will leave university with debts totalling less than £6,000 - half the actual predicted figure of £12,000. The average amount of debt anticipated by parents was £8,103 and £6,764 by students.

Worryingly, two-thirds of all students expect their parents to finance them through their undergraduate days, despite two-thirds of parents admitting they have inadequate savings and investments to do so. As a result, 32% of parents would abandon the idea of early retirement, 45% would forego a new car, 46% a bigger house and 45% their annual holiday in order to help meet university costs.

The research reveals that 39% of parents don't save anything to help fund their child's future, reflecting the competing priorities on many family budgets, whilst some 65% of grandparents are not saving for their grandchildren. Of those parents who do save for their children, 38% save less than £200 per year, with 50% of these saving £100 or less per year.

In contrast, almost one in five (19%) parents are saving over £500 per year for their children, but with most family budgets limited, 76% of parents and 77% of students admit to being concerned about the prospect of rocketing debts. In addition, 87% of parents who save do so in a bank or building society, potentially missing out on the long-term potential of the stock market.

With graduate salaries averaging £21,000, this year's graduates look set to shell out at least half their monthly pay packet on tax and National Insurance (£426), student loan repayments (£82) and rent (£464). Additional costs such as groceries, travel and clothes mean that few will be able to clear outstanding debts, let alone put money away in a pension or save for a deposit on a house.

Commenting on the research, AITC Director Annabel Brodie-Smith, said: "Many young people go to university to enjoy some of the best years of their life but at the end of three years find themselves deeply in debt."

"Our research shows that neither students nor their parents fully appreciate the hefty costs of higher education. Students expect their parents to fund them, when in actual fact, less than a third of parents say they are in a position to do so. The result is that many parents will have to make very real sacrifices in order for their children to attend university."

"However, with a little forward planning, some families could avoid this situation. Parents are facing ever mounting costs and financial pressures when bringing up their children, but if it's at all possible saving for your children for the long-term from an early age can give them a financial head start in life."

"Investment trusts are an ideal way for parents to tap into the long-term potential of the stock market. By investing in a variety of companies on your behalf, they can spread investment risk, and with low minimum contributions, they can meet a variety of budgets. A £50 per month investment in the average investment trust over 18 years to 30 June has increased to £20,841, whereas a lump sum of £1,000 in the average investment trust has increased to £4,532 over 18 years."