With the news of increased university fees highlighted by last week’s student demonstrations, the extensive costs of raising children seem likely to continue rising in the future.
The changes mean English universities will be allowed to charge up to £9,000 a year for courses that start in late 2012 onwards.
The rise, coupled with tougher means-testing for grants and increased interest payments on student loans, has left many students staring at decades of student debt.
A student starting a course in September 2012 would pay out up to £27,000 over 3 years, which in addition to a further £10,000 loan to cover costs whilst at university could leave them nearly £40,000 in debt before they have even thought about looking for a graduate job.
Whilst the salary threshold for repayment will be increased from £15,000 to £21,000 a year, this will also trigger increased interest payments.
In America, where college costs upwards of $50,000 a year, many parents start saving for their child from birth. The UK government’s recent announcement that it will launch Junior ISAs to replace Child Trust Funds could become extremely relevant to parents wishing to alleviate the costs of their children’s education.
The tax-free Junior ISAs will keep savings untouchable until the child’s 18th birthday, and will likely attract decent rates of interest due to the long-term nature of the investment.