With colleges starting to ready themselves for students in the next two months, those lucky enough to be awarded a place will be excited at the prospect and a little intimidated even overwhelmed at the logistics not to mention the financials.
It is estimated that the actual current cost of raising a child from birth until completion of their 3rd level education is just short of a whopping € 240,000. Recent Bank of Ireland Begin research revealed that 80 per cent of parents said they do not believe the current State Child Benefit of €140 per child is sufficient to help them with their children’s education expenses. John Lowe of MoneyDoctors.ie tells it as it is…
In addition, 86% of parents surveyed for the study said that any possible further reductions in the child benefit allowance in future Budgets would leave them in a “financially difficult” position when it comes to funding their children’s education.
Inversely I had worked out that if you invested that € 140 Child Benefit each month in a stock market managed fund from the first month your child was born, continued it for 18 years – it finishes on the 19th birthday – fund the 18th year yourself, assumed a growth rate of 5% each year – from 1991 to 2020 the actual average annual growth in the stock market was a staggering 10.72% – you would wind up with c. € 44,000.. just over the amount required to fund your child’s entire 3rd level education. Kept in a jar by the door for Beatle fans.. no interest – would realise € 32,240, still some € 12,000 shy of what you need for one child’s 3rd level costs.
Now when I tell you that 95% of households use the Child Benefit for the precise reason of its introduction.. to help families financially with their week to week family living costs.. you can understand why many families are under great financial strain when their children actually reach 3rd level.
In the UK the average student debt is £44,000 (€ 51,163) while in the USA it is even greater where the average student accepts that they will have to repay their student debt for the first 10 years of their working life by paying 30% of each month’s income. It is inbuilt with their mortgage/rent payments. Here in Ireland, we are a far cry from that where the parents are saddled with this debt from day one.
For those with limited income, you can apply for a grant – SUSI ( Student Universal Support Ireland ) is a complicated grant process and outside most families’ eligibility especially those in the middle income bracket. Click on the link to check the specifics and see if you qualify – https://susi.ie/eligibility-reckoner/
One of Simply Red’s best known songs says it all Money’s too tight to mention and I am sure I do not need to repeat the advice to students reading this – shop around and also look for value. The difference between social-distancing in McDonalds and Eddie Rockets might mean you have the fare to get home or pre-packing your own lunch will be even cheaper ! Your student card can also sometimes be a God-send.
As far as the financials are concerned, when it comes to student loans I would always check out your local credit union first – they generally have the best rates and are the most flexible especially now when they are being charged on their customers’ surplus cash by AIB Bank and Bank of Ireland.. Of the two pillar banks, AIB offer c. 8.15% (8.45% APR) so € 3,000 over 1 year will cost € 261.22 per month – interest for the year amounts to € 134.68 ) while Bank of Ireland offer 5% loans over 5 years, with a 3 month moratorium at the start ( € 188.14 per month for € 10,000 – the maximum you can borrow )
Credit cards are a minefield. Most students do not have the income to repay so therefore knowing the interest rate chargeable is important. Late payments will attract a charge of € 7 – so don’t be late and do not use your credit card at ATMs… interest is applied immediately plus the minimum rater is 25% ! Should you “max out” your card, you will be required to repay over a 12 month period – so on a limit of €1,500 the monthly repayment including the € 30 government stamp duty will be € 127.50 per month – tough when you have to study too ! An Post Money’s credit card ( they offer 0% for 12 months on balance transfers ) should be checked out while Revolut has already established itself in the Irish market.
When it comes to current accounts, the pillar banks would have the edge. None of the providers charge fees though the government still have their stamp duty charge on debit and ATM cards of 12 cent per transaction ( to a maximum of € 2.50 for ATM cards and € 5 for both ATM and debit cards ) Bank of Ireland have charges – basically € 6 per month standing charge. Check out the Competition & Consumer Protection Commission’s website – https://www.ccpc.ie/consumers/money-tools/current-account-comparison/ for comparisons.
I would certainly suggest a student budget. You should know what your total expenses are in relation to the income/grant coming in. You have two choices if your expenses exceed that income – earn more or cut costs.
Remember US President Benjamin Franklin’s wise words – Rather go to bed supperless than rise in debt. Enjoy your studies but have fun.