If your children are hoping to be off to university in the next few years, you should pay careful attention to the present review of student funding.

Since scrapping grants and introducing a system of tuition fees and loans, the Government has been besieged by complaints that students face unacceptably high levels of debt.

And parents have been increasingly unhappy at the amount they’re expected to shell out - their contributions this year are expected to add up to pound;508 million.

But now the Government says it’s going back to the drawing board, and has held out the prospect of a new approach to student funding by 2003.

You might think students have always been broke, always moaned about money - and that probably it’s no bad thing for them to live frugally for a few years. But the scale of debt has risen enormously - and many fear this is stopping talented pupils from applying for university places.

Barclays Bank, which has monitored student finances for the past decade, says this year’s graduates - the first to have faced three years of tuition fees and the loss of grants - are leaving university owing an average of pound;10,000 each, a doubling in levels of debt in a single year.

Then, just to get parental nerves jangling, the bank predicts that anyone having a baby this year will have to pay pound;50,000 to put her or him through university - and that they should be putting away shovel-loads of money in preparation.

Now all bets are off, as a variety of funding mechanisms are considered. A likely option is to introduce grants, means-tested or otherwise, repayable through a “graduate tax” once students start earning. They will still be paying, but it will draw the sting of the up-front demands of the tuition fee and will soften the headline figures on student debt.

Whatever system is introduced, parents will still have to stump up money. And it’s middle earners, such as teachers, who will be most stretched, as they’ll miss out on the subsidies available to low-income families and are unlikely to be in the too-rich-to-care bracket. (It’s a kind of continuation of the days when the only students collecting the full grant were those whose parents owned half of Norfolk but had accountants to show they had no spare cash.) So if you want to save for your children’s education, what should you be considering?

Specialist investment packages are available, such as “university bonds”, in which you make a monthly contribution into endowment policies that pay out when your children start university.

These are long-term investments, with payments made over a minimum of 10 years, and aim to deliver a higher return than a savings account. In terms of what you get for your money, if you paid pound;170 a month for the next 10 years, and it grew at an average of 7 per cent, you might receive more than pound;25,000 spread out over three years.

But written in fiery letters across the sky should be the warning that investments can go down as well as up - and that the returns will depend on how the investments perform. At the moment, a shoebox under the bed is outperforming many stock-market investments.

But you don’t necessarily need the wrapping of a branded university savings package. An individual savings account (ISA), whether in the form of a stocks and shares account or a cash one, can be used as a tax-free way of saving. Friendly societies are also touting for trade in the university savings market, offering the benefits of a tax-free allowance on investments of up to pound;25 a month.

There are no magic wands - and raising the lump sums needed means years of salting money away. Barclays estimates that to raise the necessary pound;50,000 you would have to have invested pound;66 every month for 18 years.

s.coughlan@virgin.net