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Planning College Fees
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Children today, more than ever, need to have a college education and to qualify with a degree. This provides them with the best hope for success and the chance to capture every opportunity that comes their way in whatever career they choose
In Ireland today and more than likely into the future, funding 3rd level education is a significant financial challenge. Generally speaking, unless parents are independently wealthy, saving for fees is the only way to be certain that funds will be available when college comes along
The average cost of a year in 3rd level education is €10,000. If this is taken from income in that year then the gross amount is €10,000 + income tax + USC. The chances are that this will put a strain on current spending as most people would not have that amount left over as disposable income after everything else has been paid
To avoid the risk of not having it available, probably the best option is to build the college fund using a regular savings plan. This plan would be targeted to provide the money for the fees at the time they are required. These will normally be 15, 10, 5 year plans, depending on when it is started and starting as early as possible is always best
See below a summary on funding education fees to help with thinking about planning for 3rd level fees
Paying for College Education
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- Would you invest €31,000 in an education plan?
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To get a return of €750,000!
Figures Explained...
The €31k is the average cost of funding 3rd level education over three years
Source: Higher Education Authority 2008
The €750,000 is a persons expected increased lifetime earnings because of having a 3rd level qualification
Source: National Census of America 2009
Solution to finding the €31k to cover the three years of college education
€100 per month indexed saved for 15 years at an annualised growth rate of 6%
Fees and some alternatives to consider
Student Jobs - great, but unlikely to cover everything?
Gifts: apart from the actual expense, can also be liable for gift tax
Loans: very expensive money for this type of spend!
Current Income: but €10k net from earnings is a lot of money
Student Stay at Home: still some costs and this may not suit
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Before you make up your Mind |
Finding the Fees - Formula for Success
- The solution is sometimes a combination of a regular savings plan with the expectation that some of the alternatives may be available
- It is best to save as much as possible. If it is not all needed that is a bonus at the time
- Don't depend completely on being lucky with the alternatives; that is normally a recipe for failure and for this particular financial goal, failure is not an option!
- The best first step is to think about it carefully and then look at some immediate actions to get started
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