MOST PARENTS agree that the third level education years will be the most expensive for them, yet only 37 per cent have specifically started to save for these years. Almost three-quarters can already see themselves having to borrow to fund these costs, rising to 90 per cent if the Government re-introduces college fees, as has been mooted. These figures, from a Bank of Ireland Life survey held last autumn, underline the need for early planning to fund college education.
The average annual cost for a student living out of the home is around €10,000, although this varies significantly depending on location because of different rental rates. For those staying at home the cost is about €6,000-€7,000.
With registration fees set to increase again in the coming academic year, both parents and students are under increasing pressure. Parents who have experienced salary reductions, those who are unemployed and those with a number of children in college are experiencing a particularly tough time with increasing costs and fees.
The situation is only likely to worsen in the years ahead, with the full reintroduction of college fees looking likely. Advance planning and budgeting is increasingly necessary.
Where possible, one of the most cost-effective ways parents can fund their children’s education is by setting aside the children’s allowance. Putting away €140 a month for the full 18 years from birth in a savings fund, for example, should yield a fund of around €40,000, while a more modest 12-year savings programme will still yield around €24,000.
There is a variety of funds available from several financial institutions that will generate such returns; institutions are currently very keen to attract deposits, with attractive rates available, so now is an ideal time to make use of any surplus cash in a risk-free investment vehicle, says financial advisor and self-styled Money Doctor John Lowe.
An Post, for example, has a fund ideally structured for medium to long-term saving, called the Childcare Plus fund. Making direct payments from the children allowance fund, it yields 20 per cent net after five years. Another option is the Government’s National Solidarity Bond, also available via An Post, which yields a net 47 per cent after 10 years, equivalent to 5.1 per cent gross per annum.
In previous years, many parents could unlock part of the equity in their houses to make up a shortfall in funding, an option no longer available for most people.
Lowe says that hard-pressed parents should also start lowering the expectations of their children to adjust to the new reality. “It’s been calculated that it costs €246,000 to raise a child from birth to the end of their third-level education so in these tougher times sacrifices need to be made and luxuries may need to be forfeited. Getting a part-time job, where possible, is one way of helping out,” he suggests.
Those currently attending college are certainly feeling the pinch. Caroline Kennedy of National College of Ireland has seen a number of trends. More students are paying the registration fee in instalments throughout the year, she says, while there has also been a significant increase in the number of students applying to the Student Assistance Fund, open to full-time degree and post-graduate students to help them with temporary or ongoing financial difficulties. This fund is separate to the general Student Grant.
“More and more students are working part-time or seeking part-time work to support themselves throughout College. Whilst part-time work is very beneficial to students in developing skills, there are an increasing number of students working over 20 hours a week, missing lectures to work and ultimately falling behind in their study,” she says.
That’s if they can get work. Research by AIB has shown that students’ disposable income has fallen by over a third in the last two years and that the average student had a disposable income of €55 per week this year, down from €86 per week just two years ago. Increasingly, parents are making up the shortfall.
Parents are renting out rooms in their house to other college or international summer students, while students are being encouraged to study close to home to avoid accommodation costs, Kennedy adds.
These costs vary widely depending on location, with Dublin rents significantly higher. A survey by daft.iesuggests that average rents for students in the city centre are €485 a month, while in Waterford the average rate is €271. The trends suggests that rental rates are hardening in the capital, following declines in recent years, while in locations such as Limerick and Letterkenny there have been increases of the order of 7-8 per cent.
Funding third-level education is tough, but it is a worthwhile effort to make. “Whilst it is definitely a struggle for both parents and students, there is no doubt however that a third-level degree creates opportunities, has a very high currency with employers and a profound effect on a person’s earning potential over a lifetime,” says Kennedy.
This importance of a degree is backed up by the CSO Educational Attainment Thematic Report 2011. Employment rates clearly increase with the level of education attained. Those with secondary education had an unemployment rate of 14 per cent; those with a PLC qualification had an unemployment rate of 18 per cent; and those with a third-level qualification had an unemployment rate of 7 per cent.
COLLEGE YEAR WHAT IT COSTS: Study books and material €630
Clothing €378
Food €1,521
Registration Fees €2,284
Computer/internet access €180
Transport €864
Rent (outside Dublin) €2,583
Utility bills €554
Pocket money (9 months) €991
Total €9,985
Source: DIT Campus Life Cost of Living Survey 2011/2012
