Using the Junior ISA to save for your children’s university fees
It’s been impossible to watch the news recently without one reference of another to the tuition fee hikes planned by the current government. The Junior ISA could well be just the product to help you and your children afford university.
Whilst your children may only be young, the costs of university remain a worrying and very real prospect, even such a long way down the line.
With fee’s set to rise to £9,000 a year, a 3 year course could cost students over £40,000 including living expenses, a far cry from 5 years ago when that figure sat at only £12,000.
With education costing more, parents will increasingly need to adopt the Americans approach of saving for college from their children’s birth. With American college stays costing up to $37,000 (£30,000) a year, parents set up trust funds at birth and contribute throughout the child’s early life to help contribute towards these costs.
The Junior ISA is an ideal, tax free, savings plan to give parents in the UK a similar luxury, and just a small contribution every month will make a massive difference when the reality of university comes round 18 years later.
Those saving £50 a month at an average interest rate of 5% for 18 years will be left with a fund of £17460.10, with £75 a month leaving you with over £26,000.
Whilst the tax free limit has yet to be announced, the Junior Isa is believed to be very similar to the Child Trust Fund, which has a limit of £1,200 a year. Saving the full amount each year would leave savers with nearly £35,000, a sum that could all but pay for university for your child.