Parents can expect to pay €70,000 for each child's education – and that's before the reintroduction of third-level fees, writes Caroline Madden
NEW RESEARCH has confirmed what hard-pressed parents have long suspected: although ostensibly free, education in this State is an incredibly costly business, and the earlier they begin making financial provision for it, the better.
According to the latest estimates, it costs an astounding €70,000 to fund a child’s education from their first teary-eyed day in junior infants right through to throwing their graduation hat in the air after finishing college.
This breaks down into €12,000 to get through primary level, another €13,000 to get past the Leaving Certificate, and an eye-watering €42,000 to fund third-level education, thanks to costs such as an estimated €3,285 on rent each year, almost €1,300 in annual “pocket money”, and about €1,500 on annual registration fees.
This does not even factor in the possible reintroduction of third-level fees.
According to Bank of Ireland Life, which carried out the research together with www.schooldays.ie, more than half of all parents surveyed have no savings plans in place to fund their children’s third-level schooling.
Even at primary and secondary level, parents are already feeling the strain.
The vast majority of parents surveyed said they now felt pressured into contributing towards the running of their children’s schools.
Almost three-quarters said they had to give extra money to their children at least once a month for fundraising events and school supplies.
Annemarie Wade of schooldays.ie, an online resource for parents and teachers, has noticed that parents, in a bid to cut costs, are doing more research online this year before making school-related purchases. Not surprisingly, the facility on her website that enables parents to sell and swap second-hand school books is proving very popular.
Parents are becoming increasingly cost-conscious when it comes to immediate back-to-school purchases, but what steps can they take to make adequate provision for future costs?
By simply starting early, choosing the right home for their savings and putting away a regular amount, parents may be surprised by how quickly their education nest egg could grow.
For example, according to Bank of Ireland Life, if €150 a month was saved in its SmartChoice Education plan during a child’s primary- and secondary-school years, parents could have saved more than €31,000 by the time their little darling is ready to head off to college.
On the surface this seems like an enticing proposition but, as with any financial product, it is vital to read the fine print and acquaint yourself with the charges, fees and conditions.
For example, Bank of Ireland Life pockets a not-insubstantial 5 per cent “contribution fee” on investment amounts of up to €12,000 a year, while a 3 per cent fee applies to amounts over this level. A further 1.5 per cent management fee is deducted each year.
Parents must consider their savings time horizon. For example, the SmartChoice Education plan has a minimum investment period of seven years.
“If your child is due to start third level in the next five years, we’d suggest saving your money on deposit,” advises Ciarán Phelan, chief executive of the Irish Brokers’ Association.
“The reintroduction of fees is already well under way with some universities increasing their ‘administration fee’ to over €1,500 a year,” he continues.
“It’s difficult to know how much to invest but, based on previous fee levels, we suggest putting aside €400 per month.”
Aaron McCann of Capital Advisory Services, a member of the Citadel broker network, advises that deposit accounts are the most suitable for parents with a time horizon of five to 10 years.
“Anyone with younger children should consider an equity-based savings account,” he suggests.
Of course, given the stock-market carnage witnessed over the past two years, parents may be hesitant about gambling their children’s education on stocks and shares.
Price of education: survey results
HIGHLIGHTS FROM cost of education research by Bank of Ireland Life and www.schooldays.ie:
* 43per cent of parents say third-level costs are the most expensive years of a child's education, but 54 per cent have no savings plan to fund these costs
* 80per cent do not believe the current State child benefit of €166 per child per month is sufficient to help them with their children's education expenses
* 86per cent say any reduction in the allowance will make it difficult to fund their children's education
* 78per cent will experience financial difficulty as a result of the ending of child benefit for those over 18 and in full-time education from 2010
* Justone-quarter of parents save the monthly child benefit payments they receive, with 40 per cent of these parents opting to do this with a long-term investment plan
* 67per cent of parents believe the best time to start saving for the cost of their child's education is when they are 0-4 years old
* 50per cent of parents plan to buy a larger-size school uniform for their children this school year
* Onein five parents plan to reduce their children's weekly pocket money by an average of 50 per cent as they experience financial challenges
* Almostone in three parents will spend less on extracurricular activities for their children due to the current economic environment
