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Are university fees on the rise? Tips to start saving

POSTED: 7th July 2015
IN: Personal Guides
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Pre-election speculation warned that university fees could rise to £11,500 per year under the new Conservative government, pushing the cost of tuition for the average three year course up to £34,000.

undefinedPre-election speculation warned that university fees could rise to £11,500 per year under the new Conservative government, pushing the cost of tuition for the average three year course up to £34,000.
Although any rise in tuition has not been formally acknowledged since the party’s recent victory, William Hague, Leader of the House of Commons, has not ruled out the possibility of a rise in tuition fees.

Added to the general living costs associated with being a student, by 2020, the average graduate could owe a total of around £51,600.  And with about one in five parents reporting they have faced financial pressures to support their children though university, what can the parents of  today’s school aged children do to ensure they put enough money aside to secure their children’s university education?

Start saving as early as possible

The rising cost of education, regardless of the recent speculation, means it’s never too early for parents to start saving towards their child’s university investment. Saving little and often from when children are a young age will provide a fund to allow whatever higher education avenue your child decides to pursue.

The rising cost of education, regardless of the recent speculation, means it’s never too early for parents to start saving towards their child’s university investment. Saving little and often from when children are a young age will provide a fund to allow whatever higher education avenue your child decides to pursue.

For example if you saved £120 a month over a period of 18 years with an annual return of three per cent interest, you could generate around £34,000 investment (the estimated cost of the fees). Increasing this investment to £182 a month at three per cent would result in a pot of £51,600 after 18 years, potentially enough to cover fees and living costs.

However, £182 per month is a significant amount for many families to find from their standard income, especially those with more than one child with ambitions to go onto further education. For this reason, some families who are still eligible for child benefit are now investing this money in their children’s educational future.

How to choose the right savings account for you

Choosing the right savings account for you all depends on how much you plan to save each month, the length of time  you have to save and your own financial flexibility. Starting off by setting up a junior ISA for your children is a way to begin cash-building and take advantage of the competitive rates available. As your children get older and the investment accumulates, fixed-interest savings or ISA accounts can be a simpler way to grow your funds.  

A fixed rate savings account protects your money from fluctuations in interest rates, paying out a fixed sum over an agreed period of time. Once you've made your opening deposit, your interest builds according to the rate specified at the outset. The compromise is that you won't be able to make any more deposits or withdrawals, or close your savings account before the maturity date. Likewise, a fixed-rate cash ISA provides the same higher rates available on fixed-term accounts, but with the added  benefit of tax-free interest. At the end of the fixed term you can assess your options and seek out the best rate for your money against a new term.

If, like most parents, you don’t have a large sum to invest, and would rather build your fund over a period of time, then an easy access account may be more appropriate. The rates in these accounts do tend to be lower, but the off set of this is that you are able to grow your nest-egg on your  terms, depositing money as and when it becomes available. You’ll also have the added safety-net of being able to access your money at any point should you need it.

Whatever route you're considering the golden rule of saving is to start as soon as possible. The more time you allow, the larger the fund you will have to ensure your child doesn’t graduate with unnecessarily large debts.

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