Planning for University can be an exciting time for young adults, but not so much for their parents if they have not made financial provision to plan for this expense.
And expensive it is – not only the major items like tuition fees and accommodation but what about the cost of living –rent, bills, food, books, broadband, mobile phones, travel and let’s not forget the beer!
The list is endless and unless you started saving early how are you and your children going to foot the bill?
Let’s take a look at the actual costs. According to The Guardian, it can cost around £85,000 per child per degree – but it all depends of course on the geographical location of where the university is situated that the child has chosen. Using a growth rate of 3% net, it will cost £608 per month over 10 years to save £85,000.
Or with a capital lump sum to invest, £60,000 over 10 years should give enough to fund one child. This is a huge expense and if you have more than one child you have to multiply this up. There are a lot of people who have left it too late to fund for this cost and unfortunately their kids may be saddled with debt for a long time to come.
So what are the options ? Well, we’ve heard about the ‘bank of mum and dad’ to start children on the housing ladder – how about the ‘bank of gran and granddad’ for university fee planning ?
With HMRC receipts on the way up for Inheritance Tax, if done correctly this could be a very tax efficient way of funding the fees – potentially saving 40% (dependant on circumstances). Think of it as ‘life gifting’ rather than waiting to gift via a will – particularly useful for ‘lazy capital’ (ie money not being used or needed).
If you would like to discuss the options further based on your personal circumstances, please contact us >>