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Different Ways Parents Can Save For University
The Cost of University
2012 was a big year for UK universities, it was the first year that universities could choose to charge up to £9,000 in tuition fees, a rather controversial new ruling, but it also saw a fall in the numbers of people applying for university places. So far, for the 2013 cycle, numbers appear to be up, with a 3.5% increase in the number of students applying to go to university.. More universities, however, are choosing to charge the full £9,000 for tuition fees, with 94 universities charging the maximum amount in the 2013 cycle, over 82 in the previous period. Deciding to go to university is a big social, educational and financial decision, for both students and their parents and one that needs to be considered carefully. With the new tuition fees in place, finances and money management are more important than ever. This hub aims to provide some ideas about how parents can prepare themselves and their children financially for university.
For most new students, going to university can mean a move away from home and parents for the first time. It is an opportunity for young adults to not only learn new things about their chosen subject of study but about life and looking after themselves. One of the key things that any parent should do before packing their child off to university is to make sure that they understand how to manage their money and know how to budget. Finance and money management are often subjects that are neglected in schools which can leave students with little to no understanding of the concepts. When presented with a large chunk of a student loan, it can be tempting to students to fritter it away on things they don’t need, overspending on clothes or nights out and falling into debt. This can easily be avoided if you teach your children how to manage their money. Before university starts you could help them to work out a practice budget so they know what they can and can’t afford.
In order to actually receive a student loan, if they have applied for one, your child will need their own bank account. If they do not have one already this can be a good opportunity to shop around and look at which student accounts offer the best deals. Some student bank accounts come with an interest free overdraft, which can be useful if your child ends up spending too much, but can also be a cheaper way to borrow money - especially when compared with the other options available (credit card and bank loans). To try to entice new customers, some student accounts will even come with added extras such as a student rail card or travel insurance. Most bank accounts should also come with an online banking service - which can be useful for internet savvy students to keep an eye on their funds.
There are a number of things that will need sorting before your child leaves before university. In most cases they will need supplies to take with them, such as cooking equipment, duvets, stationery and various household items. When perusing the shops for the things your child will need, don’t just grab the first things you see, do some research and shop around. You may find a better quality item (or at least one better suited to the rigors of university life) for a cheaper price or you may find deals and offers that can save you money. When stocking up on the household items your child will need, it is important to consider every avenue. For those going into private accommodation rather than university halls you can also save money by making sure that your child is not paying council tax. Students in full time education do not have to pay council tax. This right is not automatically applied so you should have your child apply for an Exemption Certificate.
Fees & Loans
When it comes to finances, any parent of a student should make sure that they are receiving everything they are eligible for. A student loan is made of two parts, the tuition fee loan (that is paid directly to the university) and the maintenance loan which is designed to cover the cost of living. For the 2013 cycle students living away from home can receive up to £5,500 and those living away from home in London can receive up to £7,675. All UK applicants are eligible for 72% of the total maintenance loan amount available for their university living circumstances (i.e. London or the rest of the country) - the rest of the amount is dependent on family income so you should make sure your child is receiving the amount they are eligible for.
It can also be helpful to look into the grants and financial schemes that are available. In these economic climates, where tuition fees are climbing, universities need to be able to show that they are not excluding people from less-wealthy backgrounds. If family income is under £42,611 then your child is eligible for a Government Support Grant. The amount your child receives depends on the family income, for example if it is lower than £25,000 they get the full £3,354, if it is £35,000 or lower they will receive £1,478. Loans have to be repaid, grants do not, so it is always worth looking into what is available. Charities, trusts, academic bodies and civic or business organisations often provide small grants depending on circumstances i.e. course, or academic achievement.
Long Term Saving
Finally, one of the best ways to prepare financially for university is to start saving early. Many parents want to help out with their children’s finances while they are at university if they can. Others want to have some savings on hand if the child gets into financial difficulty. Some parents want to help their child repay their student loan and keep them debt free. Others want provide a little extra if their child does not receive income-assessed grants. Putting aside a little amount every month while your children are still young can really make a difference in the long run. One of the best ways of saving money for university is through an ISA. If you would like to save the money in your child’s name then you can open a Junior ISA on their behalf. Putting savings in a JISA will allow both you and your child to benefit from the tax efficient nature of an ISA. An added bonus with a Junior ISA is that the money is held in your child’s name and they can access it once they turn 18 or they can continue to keep it invested until they need it. You should make sure to think carefully about your financial options when it comes to university as some advanced planning can really help both you and your child.