Family Investments has said that parents may need to save up to £82 a month if they are to cover to the costs of dramatically increased tuition fees, with children’s savings website MyEggNest.com suggesting it may be time for the US idea of the college fund to catch on.
The hike in tuition fees, announced at the end of last year and provoking a wave of student protests, will mean the costs of a degree may be treble what they are currently. The new fees will start from a minimum of £6,000 to a maximum of £9,000, and there is already evidence that many leading institutions are looking to charge the maximum fee as a marker of status, and to absorb cuts to research and teaching funding.
With the average monthly direct debit into Child Trust Funds at £24, Family Investments has said this will not be enough to cover the costs of the fee hike.
However, the children’s savings provider said higher education may be afforded by saving £82 a month from the birth of your child, with the amount rising to £129 a month if saving is delayed until the age of five.
Natasha Terbraak of MyEggNest.com, the UK’s leading online children’s savings resource, said: “With the likelihood of a three-year degree costing £27,000, it is vital parents take advantage of their Child Trust Fund or alternative savings plan, and do so as early as possible to maximise growth. The fee hike is bad news at a time when we have just seen the scrapping of the Child Trust Fund for babies born this year; however, the Junior ISA which is planned for launch this autumn will be another savings vehicle for parents to start a university fund.”
She added: “In the United States, where college can cost anywhere from $30,000 to $75,000 per year, saving early has always been a necessary habit for parents. It may be the case that it is time for the UK to catch on to the idea of the college fund, and look more extensively at the various children’s savings options available.”