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Saving for Education

With children heading back to school, and lots of third-level students getting ready to start their studies, I am certain that the cost of education and saving for education is on many parents’ minds at the moment.

 

Remember that even though Ireland abolished third-level tuition fees in 1994, college is far from “free.” Students still have to pay for expenses such as registration fees, accommodation, meals, books, computers, clothing, and so on. The costs can be significant, especially if a student is going to university in Dublin, where rents are now at an all-time high. This makes saving for education more important than ever.

 

Recent research indicates that:

 

  • Just under half of parents (49%) say that they have made no financial preparations to meet the cost of putting their children through third-level education.

  • On average, parents expect to pay €5,122 a year to send a child to third-level. If the student has to move away from home, the expected cost is almost double, at €10,125 (that’s over €40,000 per child for a four-year degree!).

  • Only a third of families intending to put children through third-level education have savings specifically earmarked for this purpose.

 

Most parents will agree that education is crucial to giving their child a good start in life. With a third-level qualification now required for most professional jobs, it has become ever more pressing for parents to make sure their child gets this opportunity.

 

However, the research reveals the sobering reality that half of all Irish parents are not saving for education at all, while many others are not saving enough. In fact, two-thirds of parents expect to borrow in the future to meet the costs of college.

 

With most Irish people now having their children in their thirties, this means that parents will face a difficult struggle if they wish to put multiple children through third-level education, and then pay back those loans, at a time when they themselves are in their fifties and approaching retirement age.

 

With interest rates still at an all-time low, you may be disappointed with the practically zero returns on your savings account. I would encourage parents who are saving to organise an appointment with a good financial advisor like me to discuss maximising your returns.

 

I would also urge those parents who are currently not saving for education to get in touch. It’s never too late to start!

 

Also, think about the consequences if you don’t do anything!

 

Do you want to be in the position where you don’t have the money to pay for your child’s education?

 

Shona Chambers QFA RPA is a Qualified Financial Advisor with John McColgan Financial Services Ltd.

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