Planning For Your Kids Education
Most people in Ireland know that our education system is substantially more affordable than in other parts of the world, such as the United States, where the average cost of annual tuition can be as high as $35,000. Compared to that, the €3,000 student fees in Ireland seem perfectly reasonable. What many people may not realise is that Ireland has the second most expensive tuition in Europe, after the UK average of about £9,000. While our education system may not be reserved only for the super-rich, it hardly amounts to free education either.
All parents want the best for their children, and a large part of that is trying to open as many doors for them as possible. With no idea whether we will end up increasing fees further, or abolishing them altogether, more and more Irish parents feel the need to start saving for the future of their children’s education.
The Cost
As it stands right now, the average cost of sending a child to third-level education in Ireland is between €4,611 & €8,330. Of this, roughly €3,000 is spent on student fees, which is a cost that essentially all students must pay, with the exception of those who qualify for a scholarship or bursary to cover it.
After student fees, the next biggest cost incurred by students is for accommodation. Obviously, given the current state of the housing market in Ireland, this is going to be a significant cost, and one that doesn’t offer a lot of leeway. Parents of students who decide to study in a local institution may be able to save here, but with no way to predict what your children will study or where, you have to assume it will not be local.
Although the housing market will fluctuate in the nearly two-decades it takes a child to reach college-age, we can still get an idea of the costs. In 2019, students spend an average of between €3,442 & €4,219 on purpose-built student accommodation. Those who decide to rent off-campus spend an average of €3,750 a year. Other costs, such as food and transport, cost parents an average of €2,295 a year. At this point, it is worth noting that the average cost of sending a child to secondary school is €1,735, so without properly planning ahead, both parents and children could find the jump in costs too much to cover.
Planning Ahead
A survey carried out by Bank of Ireland found that, although 99% of Irish parents hope their children will go on to study in third-level education, just 55% of those who responded said they were already saving to fund those studies. At this point, it is worth noting the cultural changes that have taken place in Ireland over the last few decades.
As recently as 2009, student registration fees in Ireland were just €850, so the dramatic increase over the course of 10 years was not something that had been anticipated. Furthermore, while 99% of parents may now expect their children to go to college, this has not always been the case. In 1991, just 13% of people had attained third-level education in Ireland. By 2016, this had jumped to 42%. This is important to acknowledge because of the national psyche. As the current generation of college students are among the first for whom third-level education is an assumption, not an aspiration, combined with the fact that fees were lower, the idea of setting up a “college fund” was never as common as it is in countries where the fees have always been high. As a result, some people have been left in limbo, having assumed they would be studying, but with no preparations in place for funding.
Saving Now
Obviously, there is no way to predict where college fees will be when your kids finally head off. Everything from Brexit to the local elections in 2028 could play a role in determining how much your children are charged for their degrees. But for a ballpark figure, most pragmatic experts estimate that the total cost of a degree will move from about €35,000 now, to somewhere in the region of €40,000 to €50,000 in ten years.
With that in mind, the obvious first-step is to divide €50,000 by the number of months left until your child will reach college-age. For example, if you start saving when they begin secondary school, saving €694 a month will get you the pot you need within 6 years. Obviously, not everyone can afford to put away almost €700 a month, so the sooner you start, the better. If you start saving when the child is born, this figure drops to €232 a month.
Right now, the child benefit payment for your first child is €140 a month until they are 17. Again, while this will likely fluctuate over the years, putting this away from the get-go could help you cover most of your costs, with the final amount saved coming in around €40,000.
Another option that is particularly well-suited for times of political and economic uncertainty (sound familiar?) is to invest your money in gold. Although people often associate the price of gold with risk, history has shown us that when the markets panic, the price of gold goes up. By deciding to put your money in gold (a service offered by most major banks) rather than a regular savings account, you can give yourself considerable leverage over the years. The further away from college-age your child is, the easier it will be for you to track the price of gold and decide which of the inevitable price spikes is the best time to sell. Of course, while investing in gold might not be as scary as people think, you need to remember that all investments carry risk.
Planning to fund our childrens’ education is a relatively new concept in Ireland, and so many people are still getting used to it. Given how dramatically the nature of our education costs has changed and changed again over the last few decades, it’s hard for people to know what to expect 18 years from now. At worst, the costs will rise more than expected, in which case your savings will prove to be a much-needed cushion for the blow. At best, the costs will drop, and you could find yourself with a nice bonus pot. But whether the fees go up or down, the earlier you start saving, the easier it will be.