This year 60,839 students sat their Leaving Certificate - and many congratulations to them and their parents!
Many of them will go to third level education and, with that, encounter all the financial issues that need to be addressed. It is estimated that the actual current cost of raising a child from birth until completion of their third level education is just short of a whopping €240,000.
Recent Bank of Ireland Begin research revealed that 80% 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, though there is talk that this will be addressed in today’s Budget.
In addition, 86% of parents surveyed for the study said that any further reductions in the child benefit allowance next October would leave them in a "financially difficult" position when it comes to funding their children's education.
Inversely, I had worked out that if - all going to plan - 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 17 years – it finishes on the 18th birthday – fund the 18th year yourself, assumed a growth rate of 5% each year, you would wind up with c. €42,000 - the exact amount required to fund your child’s entire third level education.
Now, when I tell you that 95% of households use the Child Benefit for the precise reason of their introduction (to help families financially with their week to week living costs), you can understand why many families are under great financial strain when their children actually reach third level.
In the UK, the average student debt is £44,000 (€51,163) while in the United States 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.
For those with limited income, you can apply for a grant - SUSI (Student Universal Support Ireland). However, I believe it to be 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 way to mitigate costs is to shop around and also look for value. The difference between where you do your weekly shop could make a huge difference, especially when your student card comes into play.
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. Of the two pillar banks, AIB offer c. 8.5% (€3,000 over 1 year will cost €261.22 per month – and interest for the year amounts to €134.68) while Bank of Ireland offer c. 9.7% (€262.76 per month and an annual interest of €153.16).
Credit cards are a minefield. Most students do not have the income to repay so knowing the interest rate chargeable is incredibly important. Revolut lead the charge here but beware of those charges. Late payments will attract a charge of €7 – so don’t be late!
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 new credit card is also worth checking out – they have the best deal for balance transfers: 12 months at 0%.
When it comes to current accounts, the pillar banks lead. None of the providers including those pillar banks 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).
Check out the Competition & Consumer Protection Commission’s website www.consumerhelp.ie/currentaccounts 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.
For more information click on John Lowe's profile above or on his website.
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