Saving for your child’s university education requires careful planning and budgeting. By starting early, considering investment opportunities, encouraging your child to save, looking for scholarships and bursaries, and planning, you can make saving for university a manageable goal and give your child the best possible start in life.
What is the cost of university?
It costs roughly £66,560 to go to university in the UK. This figure comes from tuition fees costing most students £9,250 a year. As most courses last around 3 years, this amounts to around £27,750 over the course of their time at university.
As well as a tuition fee loan, students can get a maintenance loan to help cover living costs like accommodation, travel, food, and books. The average maintenance loan is approximately about £6,116 a year, so there will more than likely be a significant shortfall that parents will need to cover. However, the exact cost of university can vary depending on where your child studies and the course they choose.
It’s important to consider the following when saving for your child’s university education.
Start early
How you save for your child’s university costs will depend on how long you’ve got before the money will be needed. For example, if your child is due to start university in the next few years, sticking with cash savings is likely to be your best option so the money is readily available and there’s no investment risk.
Consider Investing
Investing some of your savings can help you achieve higher returns, but it also comes with higher risks. It’s important to understand what investment options you have before making any decisions. These options include:
- Stocks and Shares ISA – A tax-efficient investment account that can help make your money work harder. Unlike a cash ISA, a stocks and shares ISA gives your money more potential to grow by investing it in a range of places like shares, funds, investment trusts and bonds, instead of keeping it in cash.
- Junior ISA – Junior ISAs have a tax-free allowance of £9,000 per tax year, which can be invested in cash, stocks and shares, or a combination of both. The funds in a Junior ISA are locked in until the child reaches the age of 18, at which point the account will convert to a standard adult ISA.
Encourage your child to save
Teaching your child about the importance of saving and encouraging them to save for their own education can help reduce the financial burden on you. Encourage them to take on part-time work and save some of their earnings towards their university education. They can use the following to help them save:
- Regular Savings Accounts – Many banks and building societies offer savings accounts for you to set up on a child’s behalf. Regular savings accounts are designed to encourage children to save an amount every month, and often run for a set amount of time.
- Instant Access Savings Account – Instant access savings accounts allows you or your child to withdraw or deposit money at any time.
Scholarships, Grants and Bursaries
Each university offers their own scholarship, grant and bursary programmes to help students pay for their education. Different universities offer different financial aids, so it is worth doing your research beforehand. Your child may be eligible for financial support based on academic or sporting achievements.
Plan Ahead
Creating a financial plan and setting goals can help you stay on track and make saving for your child’s university education more achievable. Work out how much you need to save, how much you can realistically contribute each month, and how long it will take to reach your goal.
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
Approved by The Openwork Partnership on 22/05/2024