New figures on real cost of education: A wake-up call for parents?
For far too long, the true cost of education has been something of an ‘elephant in the room’ in financial planning.
It’s a subject that too few clients want to discuss with their financial adviser, but with new figures revealing that the cost of a university degree is now £100,000 in this section, parents must address the issue in order to be in with the best chance of being able to provide their children with a quality and meaningful education.
The alarmingly high amount is considerably more than the often-quoted tuition fees of £27,000 or £36,000 (for three or four year courses, respectively) and, according to an Independent on Sunday investigation, it is due to interest payments, amongst other fees.
Shockingly, this £100,000 does not take into account additional expenses including travel, educational materials, accommodation, and phone and internet bills.
Nor does it factor in the rocketing costs of schooling your child before they reach university. Indeed, the cost of privately educating your son or daughter to the age of 18 in the UK could soar to more than £360,000, experts recently warned.
All this latest research supports what my colleagues and I have been saying for a long time: that it’s vital to plan ahead early to ensure that enough funds have been put aside for the provision of education, especially as education fees tend to increase more quickly than inflation.
If we look at the situation for parents with a nine year old child, then in order to prepare for the £100,000 costs of higher education, then even someone that adopts a growth strategy, assuming growth rates at 10 per cent per annum would still need to be saving more than £870 per month for the next nine years when their child starts university.
By comparison, a family with a four year old who has fourteen years to save for university education will need to be saving £499 per month.
The Independent on Sunday’s study, which is based on the government’s own figures, should act as a wake-up call for parents to stop procrastinating and to explore all the options with an experienced financial adviser. With high education increasingly important in such a competitive and globalised world, it is simply too important not to.