August 22nd, 2017
With the latest announcement that A-level grades are going up, but at the same time an increasing number of gaps for university places, is the ever-increasing cost of university fees stopping the next generation from attending university, despite the intellect to do so?
The government has just announced that the interest rate for student loans will increase this Autumn from 4.6% to 6.1%. Fees will increase to £9,250 this year, which doesn’t include the cost of living, meaning that one year at a university could be upwards of £22,000, with some courses, such as medical courses that no longer get NHS bursaries, considerably higher. Resultantly, students in the UK are now coming out of university with averagely £50,000 worth of debt.
So, is it surprising that according to UCAS, UK student applications for this year have fallen by 5%? And for those still planning on going, where is the support going to come from?
The bank of Mum and Dad can expect to be worried, they have already been called upon to help more young people than ever get on to the property ladder, now it appears that our children will also need help to get them through university, so that they can realistically get the jobs that they want further down the line.
So, for those of out there facing up to this prospect, here are some of the facts and figures that you’ll need to be aware of;
Expecting that your child is going to university at the age of 18, and studying a three-year course, you can expect to have to pay £27,750 just to cover university tuition fees.
- If your child is now eight years old, you can invest £200 per month into a low-risk investment, and expect with average growth on the fund, to end up with an investment portfolio of £27,560 after 10 years of ongoing contributions.
- If your child is now five years old, you can invest £150 per month, into a low-risk investment, and expect with average growth on the fund, to end up with an investment portfolio of £27,934 after 13 years of ongoing contributions.
- If your child is just being born, you can invest £100 per month, into a low-risk investment, and expect with average growth on the fund, to end up with an investment portfolio of £27,535 after 18 years of ongoing contributions.
(above calculations are based on a growth of 2.5% pa, and have been calculated using a cash flow tool provided by Intrinsic.)
The purpose of the above figures is to try and show that for most people, a small investment over the longer term could make a significant difference, and could even mean that your child could come away from university without any tuition fee debt, making life after university much more manageable.
If saving like this to secure your child’s future sounds more appealing than having this generation of potential students either miss out on studying, or facing the prospect of having a debt hanging over them for years, then please get in touch with Duncan Craze at Contractor Wealth, who will study the options you have, to ensure that planning for the future should be academic.
The value of investments may fall as well as rise and past performance is not a guide to future returns.
Financial advice is given by Contractor Wealth Management Limited. Registered in England and Wales under Company number 07773485 at 9 London Road, Southampton, England, SO15 2AE. Contractor Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority under FCA Register reference 582895 and is an appointed representative of Intrinsic Financial Planning Limited; on the FCA Register under reference 440703 and Intrinsic Mortgage planning Limited as reference 440718.
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