The Rising Costs of Education

If you also want to plan for school fees you are looking at even greater expense. On average boarding school fees are currently £16476 a year, with day schools costing £7188 a year* These costs are set to rise rapidly as well, as school fees are increasing on average at 7% a year. In London, this increases to 10%. Use the calculator once for each year involved and the add the savings required together - and then decide what you can actually afford. If you are a smoker, see what you could save by quitting ! Giving up a 20 a day and regularly saving the cost would just about meet the forecast cost for University fees for one child in 18 years time.

Of course, if your children are at the stage of entering school or University you might think that it is too late to be planning how to raise this sort of capital. To a certain degree, it could be said that you have left it a bit late but, providing you own a home and that there is sufficient equity in it, it may still be possible through a remortgage to raise some or all of the capital needed.

If this is the case, then you should still seek advice from an independent financial adviser. The Mortgage Shop will be pleased to recommend one in your local area.

Each year, as another set of students head off to University for the first time, there will again be lots written in the papers about the ever rising costs of a University degree. Current estimates for a three year course starting in 18 years time are put at £65363*, taking into account the additional tuition fees, that Universities now can charge (£3145 for the year 2008/09 for students resident in England & Wales who are studying outside London).

*Source: National Union of Students Press Pack for 2008/09

In practice, it is unlikely that most people will be able to save the whole amount in the time available, particularly if there is more than one child involved. However, if you can save even half the fees, it will make a huge difference at the end of the day. Have fun with it, but bear in mind that it is simply a calculator, not a guaranteed solution.

Whilst some State help towards the costs may ultimately be available, particularly where parents are on a lower income, it still implies a staggering debt for any would be graduate just starting out on a new career.

One way to mitigate the cost would be to save Child Benefit - £20 pw for the first child and £14.05 pw (wef 1st April 2009) for second and subsequent children - using a very tax efficient Family Assurance Plan, to which Parents, the children and anyone else can individually contribute. Up to £25 pm each into the tax free part of the plan and as much as they want into an associated taxable plan. Taxable in this context means that the fund pays the tax, not the individual in whose hands the proceeds are free of tax under present legislation, as long as the plan runs for at least 10 years.

Use the calculator to see how this might help your children to reduce the cost significantly, by a third or more.

The Mortgage Shop is a retired IFA that no longer gives direct advice on or arranges Equity Release. Instead, it passes your enquiry to a fully qualified and licensed professional firm, in your local area, that will do this for you. This is a FREE referral service to you, without any obligation, and you are completely at liberty to negotiate with the firm concerned the terms for their advice and services. The information provided is on the basis of our understanding of UK tax law and Inland Revenue practice and is subject to change. This site is intended for persons aged 18 or over, resident or ordinarily resident, in the United Kingdom. email: bobstark@mortgagefor.me.uk

This is about Equity Release Plans. To understand the features and risks, ask for a personalised illustration. The actual APR rate available will depend upon your circumstances.

Education Fees Monthly Savings Calculator
This calculator will help you to determine the potential future value of a monthly investment which could be used towards University fees. Please remember that future returns are not guaranteed. Investments can go down as well as up. Enter the optional initial investment amount (Child Trust Fund?), the monthly amount you plan to save, the interest rate you expect to earn, and the number of years you expect to continue making monthly savings, then click on the "Forecast" button. Did this meet the required �65363? If not, try again.
Enter the initial investment (optional):
Enter the monthly amount you wish to save:
Enter your forecast annual interest rate:
Enter the number of years:

Future value:
Interest earned: