Funding your children's education, a £45,000+ debt?
Every parent wants to give their children the best possible start in life - but the prospect of funding a child's education right through to university can be daunting. However, with careful planning and good advice, you can avoid those education headaches.
Private or state school?
If you wish your offspring to attend a private school, you will of course have to pay fees. These are, on average, over £15,000 for day schools and over £30,000 for boarding schools. The estimated cost from reception to year 13 (upper sixth form) is, on average, more than £150,000.
Fee increases continue to outstrip inflation and so saving plan performances and forecasts should be regularly reviewed if overdue reliance on funding costs out of income is to be avoided.
But even the state sector begins to look expensive when you do the sums, including the cumulative cost of transport, school trips, books, and school uniforms to see your child through from age five to 16.
Clearly, even a 'free' education will cost you money - but if you start planning and saving now, you will be able to budget to meet these costs.
A few years ago, many university students qualified for a grant which helped towards their tuition fees and living costs. Now students, or their parents, can expect to foot a fairly substantial bill each year, with annual fees now as much as £9,000 p.a.
One solution is to take advantage of student loans, which can be repaid after graduation. But the latest findings suggest that students can expect to leave university with average debts that can range from £10,000 to as much as - £45,000+, where the course is an intensive five year course, such as medicine. This level of debt has increased as a result of the top-up fees. However tuition fees increase these debts significantly to maybe £45,000 or more for many students. So if you wish your children to avoid starting their career already in debt, you should consider planning now to help fund their higher education.
Taking the right action now could give your children a head start, not a millstone round their necks.
If you have children, or if you intend to start a family, it is essential to start considering the costs of their education. Good financial management will help you meet your needs, so why not contact us, and we'll help you develop plans to provide for these costs.
- Calculate carefully how much you will need
- Start planning early and save as much as you can in advance of times of major expense
- With school funds tight, don't overlook the potential advantages of educational toys, books and computer software
- Choose savings schemes carefully, making sure you can withdraw money as the costs need to be paid, or look at specific school fees plans
- Check for bursaries or scholarships that may be available through the school or your local authority
- If your child is going to university or college in a distant city, consider helping him or her to buy a house instead of renting a flat. With care and rising property prices there is potential to fund the mortgage by taking in lodgers and for a tax-free gain on the sale of the house if you get all the steps right
- Maintenance loan support is to rise for students from low and middle-income backgrounds up to £8,200 a year where studying away from home, outside London (£10,702 inside London). Repayments are based on the student’s future income, not on what was borrowed. Loan repayments do not fall due until university education has been completed and income is over £21,000 a year.
It is important to take the right financial advice if you are considering savings plans, school fees plans or helping your child to invest in property.
Contact us if you would like further help or advice on this subject.