I have two children 8 and 10. I am looking for advice for the optimal way to save for their possible college educations. Are there any particular products new or otherwise that are useful for this purpose? I understand that tax relief is available on tuition fees, is there any tax relief available on saving towards a college education or a tax efficient way of manage this?
Saving for children’s college education
- Thread starter Fergus
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Tuition fees are free, however the ‘student contribution’ is currently €3k per annum. I’ve no idea about specific savings products but unless accommodation/maintenance is required I haven’t found college fees to be too arduous.
And would only be looking at saving for college if you have little to no other debt
And would only be looking at saving for college if you have little to no other debt
Third-level student fees and charges
Information on the Free Fees Iniative. Explains who doesn't have to pay third-level fees.
I think Fergus had more thoughts regarding university education costs for his children. There’s accommodation costs, grocery costs, travel charges, entertainment costs, clothing costs, sporting costs, books etc.
Write down the present costs for each week by week and the mountain you’ll have to eventually have to climb will seem undoable, but you’ll do it somehow like most of us did.
Write down the present costs for each week by week and the mountain you’ll have to eventually have to climb will seem undoable, but you’ll do it somehow like most of us did.
I'm not sure that you should be thinking about a "college fund" investment separate from your overall financial/savings/investment/debt situation. People often think this way and corral different investments unnecessarily and, often, at a cost or opportunity cost to themselves. Maybe you should do a Money Makeover post in that forum?
NoRegretsCoyote
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Fully agree it shouldn't be divorced from overall situation.
The big factor is whether your kids are likely to live at home or not during college.
If they live away from home, you are looking at €15k-€20k pa to put a kid through college. A simple example, one of the student accom hubs near MTU charges €240 per week. Add travel, and other costs and it adds up. Hence, you are looking at €60k-€80k to put a child through a 4 year degree course and add another €30k-€50k for a Masters (which more and more are doing these days and the Bachelors Degree is getting downgraded as a result).
At this stage, the OP will have no idea if the smallies will live at home or away so it is prudent to start planning ahead.
At this stage, the OP will have no idea if the smallies will live at home or away so it is prudent to start planning ahead.
I just resurrected our expenses for ours attending university back in the day in another city. The costs are frightening. Don’t forget there may be projects to be completed elsewhere from the college city. If so, you’ll have additional costs. Our most expensive year for such amounted to €27,000, other years being a good bit cheaper.
I don’t wish to put the frightners on anybody, but I think Peanuts20 has under costed. Sorry Peanuts!
It’s not just about the monetary expense either and I’m not going to get into that here.
I don’t wish to put the frightners on anybody, but I think Peanuts20 has under costed. Sorry Peanuts!
It’s not just about the monetary expense either and I’m not going to get into that here.
There is going to be costs if they live at home as well, have to feed the little blighters one way or another ! So getting the true cost of stay away versus costs for stay at home is not always clear.
part time jobs/summer jobs etc all help as do the Co-Op period colleges like UL do. I did 2 x 6 months paid work when I went there and it was a great way of saving a few bob. Potentially there is the SUSI grant as well.
However if you live down the country and have a bright kid who wants to do something like medicine, you're unlikely to have change out of €150k
Your best starting point is to speak to a QFA about long term saving plans that are offered by the likes of New Ireland, Zurich etc. These would be monthly savings products that will deliver a higher return that a deposit account but will have an element of risk attached.
NoRegretsCoyote
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That's jumping the gun hugely.
Without knowing the OP's full financial circumstances putting wealth into this type of product for a decade-long investment horizon may not be wise.
Kilkenny Lass
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And I think Peanuts20 overcosted. We currently have 2 in third level. One is in Dublin and got a room in a house share for €550 per month. I know this is probably good value in the current climate but he is sharing a room - its with a friend so he's happy enough about this. So along with his fees €2,000 this year so that totals €8,600. As its his final year and its a tough course he decided not to work this year - other than a bit here and there - so he is managing most of the rest from his savings but we do send him €50 per week for food. The rest of his costs he pays himself.
Our daughter is in Waterford IT (now SETU) and she is in college accommodation which costs about €5000 for the year plus this year's fees of €2,000. We send her less money as she cooks for the week at the weekend and has to buy very little when she's down there. But she does work about 20 hours a week at the weekend so is very self sufficient including running her own car.
Our oldest son (now finished college) did his Masters (€7500) and he got a BOI loan for this with repayments kicking in after one year. He managed to pay his fees late in the college year so he was working before he had to make payments. He also borrowed some money from the credit union and we paid half his rent for 5th year. But honestly felt we had done enough at that stage!
We also tell them that we don't pay for repeats - either exams or years! Feel they're well capable of passing the exams first time!
But it is tough going - we're not huge earners but because both of us work, its not possible to get the Susi grant. We do take an International 2nd level Student to ease the burden but it does involve a big effort on everyone's part .... especially the years when 2 of the kids are in the college!
Our daughter is in Waterford IT (now SETU) and she is in college accommodation which costs about €5000 for the year plus this year's fees of €2,000. We send her less money as she cooks for the week at the weekend and has to buy very little when she's down there. But she does work about 20 hours a week at the weekend so is very self sufficient including running her own car.
Our oldest son (now finished college) did his Masters (€7500) and he got a BOI loan for this with repayments kicking in after one year. He managed to pay his fees late in the college year so he was working before he had to make payments. He also borrowed some money from the credit union and we paid half his rent for 5th year. But honestly felt we had done enough at that stage!
We also tell them that we don't pay for repeats - either exams or years! Feel they're well capable of passing the exams first time!
But it is tough going - we're not huge earners but because both of us work, its not possible to get the Susi grant. We do take an International 2nd level Student to ease the burden but it does involve a big effort on everyone's part .... especially the years when 2 of the kids are in the college!
Allpartied
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Its one of the things you don't realise when the kids are 7 or 8.
We saved all of the child benefit, for each of our children and have a fairly healthy sum available to cover all costs.
It came as quite a surprise, to me, when they started earning. But they all have a very good work ethic. Working away at weekends and right through the long holidays. What with the Pandemic Payments, they have very healthy bank accounts. They contribute to their rent, pay for all their academic needs and, of course, clothes, socialising etc. Its nice to have the money available and we do pay the bulk of the rent and the student contribution. But, just to reassure Fergus, if they are able to work and pay for some of the costs themselves, you won't need to budget anymore than 7k per year, per child. Still a lot of money, but with time to save, it is manageable.
I'm surprised at some of the advice given here and I'm not the best where future financial decisions are made but preparing for university education expenses must be started years ahead of yours entering college - the more kids you have, the more you must prepare. In the scenario here both kids are under 11 (not a doddle to prepare). When they hit 18 the mortgage principle likely will be well reduced. Suddenly, for your kids there are day to day expenses along with week to week pay outs not to mention month to month costs. If you are not prepared these will eat you up and your kids might not have all the answers. Believe me, these will hit you like a financial Blitz so don't get caught out fighting jump jets with a pea shooter.
Even if the children have a healthy work ethic, you don't know what employment they'll be able to get 7/8 years from now. You don't know what the mortgage interest rate will be then. You don't know how much inflation will have eaten into any financial preparation. You don't know whether you'll be separated, divorced or remain happily married. We don't know if the war in Ukraine will be over next month, next year or twenty years from now. There are so many imponderables that it is impossible to look to the university years with any great accuracy. But, don't get caught out entirely.
My advice (and hard earned) is to prepare now (as in yesterday). I can't suggest any investment procedures that'll help. I don't care where you store any savings you can make, but sure thing you'll need them later. Will the banks make a loan available to you if you need one? How's your credit rating? Can you repay without being financially hurt? Is it time to consider joining a Credit Union? CU Loans are dearer but they are more sympathetic if you default.
The only certainty here is that you can't stand still. You've got to start preparing immediately. Any other advice is almost useless unless you know the Lotto winning numbers for Wednesday and Saturday nights.
Even if the children have a healthy work ethic, you don't know what employment they'll be able to get 7/8 years from now. You don't know what the mortgage interest rate will be then. You don't know how much inflation will have eaten into any financial preparation. You don't know whether you'll be separated, divorced or remain happily married. We don't know if the war in Ukraine will be over next month, next year or twenty years from now. There are so many imponderables that it is impossible to look to the university years with any great accuracy. But, don't get caught out entirely.
My advice (and hard earned) is to prepare now (as in yesterday). I can't suggest any investment procedures that'll help. I don't care where you store any savings you can make, but sure thing you'll need them later. Will the banks make a loan available to you if you need one? How's your credit rating? Can you repay without being financially hurt? Is it time to consider joining a Credit Union? CU Loans are dearer but they are more sympathetic if you default.
The only certainty here is that you can't stand still. You've got to start preparing immediately. Any other advice is almost useless unless you know the Lotto winning numbers for Wednesday and Saturday nights.
That's not true. If the investment timeframe is c. 10 years then putting the money in a diversified equity based investment (indirect if necessary, but better still direct) will very likely be an appropriate way to proceed.
Fine! But, you (as far as I'm aware) must have the reddies up front. Can you draw down any amount (with no fees) if needed along the 10 years? If you don't draw down any amount how much per €1K can you hope to make in 10 years? Can you lose in a diversifed equity based investment? I say the foregoing as an inexperienced investor who Mrs Lep and I sent our four through college living away without grant nor tax allowances. (apologies for the bad grammar).
NoRegretsCoyote
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I am not so sure about this at all. Over ten years equities will probably outperform anything else. But if the OP is regularly saving the same amount every year for ten years for a big drawdown at the end then the average investment horizon is five years.
It depends on OP's overall wealth, risk tolerance, future income, etc. If I was on a fixed income with a big outgoing like kids' education coming up I'd probably just use state savings products due to mature around college time, certainly this approach by the kids are in late teens. Continuing to put savings into an equity-type product to cover a a 17YO's college fees in a year's time seems pretty risky to me.
Yes, but why would they be doing that of the whole point is to save for a future need - funding college expenses?