Savings: Tuition Hikes Make Brits Adopt the US ‘College Fund’

Saving early and often can help parents beat the tuition hike.

Saving early and often can help parents beat the tuition hike.

Higher levels of tuition fees are kicking in, and with them come predictions that universities will see a significant drop in applicants.

However, there are quite a few children’s savings products on the market today that maximise tax-efficiency and could lead UK parents to adopt the US’s idea of the ‘college fund.’

£9,000 a year

Universities throughout the UK have reported their predictions that the increase to £9,000 a year in tuition fees will result in a drop in enrolment. Figures vary, but some universities say as many as one in five prospective students will decide not to attend university because of the hike in fees.

Usman Ali, vice president of the National Union of Students (NSU), criticised the government’s moves to raise fees because it could potentially hinder talented young people from higher education because they come from less privileged backgrounds.

Various organisations for economic equality also criticise the move, which they feel restricts universal access to higher education.

Saving from birth

In the United States, higher education can cost as much as $27,000 a year, with costs for books and living making the total price tag sometimes reach $40,000. This means that many parents have been saving for their children’s education from birth to try and cover as much of the costs of university as possible.

It is now possible, with new children’s savings vehicles like the Young Saver Plan, to put aside money for your child tax-free in accounts that are geared towards saving for university.

This could keep your child from starting their life in debt from student loans, and can also teach them about the importance of saving.

Regardless of the criticism surrounding them, it is clear that higher tuition fees for university are a reality. What remains to be seen are what British parents will do about it, and whether they will decide to start a ‘college fund’ for their children sooner rather than later.

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