How Will you Pay for (not so) Free Education?
15 October 2021
I was struck by the crisp chill in the early morning air over the past week or two. The leaves are starting to turn golden brown and there are a few more of them blowing about in the breeze each day. It can only really mean one thing – back to the books for the students among us, and the financial worries that go hand in hand with this time of year!
Rising Costs of Education in Ireland
We are constantly bombarded via the media and by other vested interests of the cost of so-called ‘free’ education. Over the last few weeks as primary and secondary schools returned, it has been the cost of crested uniforms, school books and the now infamous and not-so ‘voluntary contribution’.
More recently, as the Leaving Cert points race concluded and CAO offers started rolling in, attention has shifted to third level where the costs are even higher again. For example, so called “Student Contribution Charges” and “Capitation Fees” for a Bachelor’s degree in Ireland are, in aggregate, in excess of €3,000 this year, and when you add up the various other expenses - not least rent and/or travel expenses if you don’t happen to be living in the shadow of your chosen university – funding a year of third level can become a cost intensive exercise. Multiply that by a three or four year degree programme and potentially a Masters Degree or more, and the costs really begin to mushroom.
How Do We Fund for These Costs?
While a small cohort of the population might have the wherewithal to finance these kinds of annual expenditures from cash flow, the costs can really start to mount up when two or maybe even three children are away at university at or around the same time. The spectre of a US model of borrowing to fund education with loans to be paid back out of the earnings made based on that education has been on the horizon here in Ireland for some time and studies have estimated that over 50% of parents feared having to borrow to fund the costs of third level education.
With Minister Donohue currently lining up this year’s budget and looking for ways to meet the ever-spiralling costs of the Covid pandemic, no-one can be certain what the university fees landscape is going to look like in five or ten year’s time.
Putting a Sufficient Plan in Place
But it doesn’t have to be this way. Wouldn’t it make sense to plan ahead and set aside some funds each month in order to at least cushion the blow of meeting the cost of third level education down the line? Setting up a savings scheme when your prospective college scholar is still young, even with a relatively inexpensive monthly contribution, can facilitate the creation of sizeable fund over time. But with deposit rates on the floor and turning negative in some instances, retail banks in Ireland are practically charging you to allow you to save with them – so what to do?
We have a range of solutions available to allow regular savers access to a broad range of low and medium risk funds in the search for a return in excess of the deposit rates currently on offer. It can be done in a risk controlled way which is aligned with your objective. So, whether your child is four or fourteen, it’s never too late (and certainly never too early!) to start putting something away towards meeting the costs of their education.
If you would like to explore how we can help you save for your child’s future, please contact me at firstname.lastname@example.org or 021 480 8041. Alternatively contact your Invesco consultant.
Senior Financial Planning Consultant
Stephen is a chartered certified accountant (FCCA) and Certified Financial Planner™. He joined Invesco following its acquisition of City Life in 2019, having been a director of City Life since 2012. Prior to his time with City Life, Stephen was an associate director with Davy Corporate Finance. Stephen has a wealth of experience in advising self-employed professionals, company owners and pension scheme members in relation to their both their retirement and investment needs as well as their general financial planning requirements.