The 60-second guide to... borrowing for a child's college bills
Published 14/08/2016 | 02:30
Many parents have to borrow money to cover their child's college bills.
Should you wish to borrow €11,000 from a bank to cover one year of college bills (which is what they're likely to come to for students living away from home), the cheapest way to do so is to take out a personal loan with Bank of Ireland or KBC Bank. Borrowing €11,000 over five years will cost you €2,147 with KBC, which charges 7.49pc interest on such a loan - as long as you have a current account with the bank. Bank of Ireland (BoI) charges 7.5pc interest on a personal loan of €11,000 - which would cost you €2,148 in interest over five years.
You must have a current account with BoI to get this rate. Ulster Bank's parental student loan can be one of the cheapest around too - this loan will cost you €2,147 in interest if you are a private banking customer with the bank or have a U-First or U-First Gold account. Otherwise, it would cost you €2,440.
It will cost €2,530 in interest to borrow the money through an AIB personal loan - though a student could borrow the money under an AIB Student Personal loan for €2,426.50.
Permanent TSB is the most expensive lender to borrow from for college bills. It would cost €3,614 in interest to borrow €11,000 from Permo over five years. The bank doesn't have dedicated educational or student loans. It only offers a personal loan which charges 12.5pc interest.
AIB and BoI offer loans to cover the cost of the annual student contribution charge - where up to €3,000 a year can be borrowed over four years. At 7.5pc interest, BoI offers the cheapest of such loans. AIB charges 8.45pc interest. It may work out cheaper to get a personal loan elsewhere to cover the student contribution charge - which currently stands at €3,000 a year.
Don't overlook your local credit union. It may offer cheaper loans than your bank.
Sunday Indo Business