Monday 18 December 2017

Could you cope with a €250 bill for college?

LET'S say you have four children -- aged 2, 4, 6 and 7. You plan to send them all to college when they reach 18 years of age. Well, good luck.

It now costs about €42,000 to send a child to college for four years, but as your first child won't go to college for about 10 years, inflation will push up that bill. If you build an annual inflation rate of 3 per cent into that figure, by the time your first child goes to college, his bill for four years will come to €58,137, according to Ross Curran of Curran Financial Services.

"The total amount you'd have to save for the eight or so years of your children's college attendance is €248,946," said Mr Curran.

Any increase in registration fees or reintroduction of college fees over the next few years will of course push that cost up even more.

Curran Financial Services totted up some figures to show how much you'd need to save each month to cover a €250,000 college bill for your four children. For each child, Mr Curran examined how much would need to be saved if your money is put into an investment fund that makes a 4 per cent annual return -- or into a deposit account that earns 2 per cent interest a year.

Your 7-year-old historian

Your seven-year-old son wa transfixed by the movie Michael Collins -- so you hope to send him to college in 2021 to study history. If you save into a deposit account that earns 2 per cent interest, you must save €390.59 a month between now and autumn 2021 to be able to foot the college bill for your eldest, according to Mr Curran. If you put your money into an investment product that makes a 4 per cent annual return, you can afford to save a bit less -- about €334.50 each month for the next eleven years.

Your 6-year-old gardener

As your six-year-old daughter spends most of her day digging up worms from your garden, you plan to send her to study horticulture in 2022.

You need to save €365.02 a month over the next 12 years to send your second eldest to college if your money goes into a deposit account that earns 2 per cent interest a year, according to Mr Curran. If you put your money into an investment product that makes a 4 per cent annual return, you need to save €307.57 a month for the next 12 years.

Your 4-year-old scientist

As your four-year-old son already looks, sounds and smells like he's been fiddling about with black holes, chances are you'll be sending him to college to study science in 2024.

To do that, you'll need to save at least €265.01 a month over the next 14 years (based on a 4 per cent annual return) to send him to college.

At most, you'll have to save €325.14 a month until 2024 to send him to college, based on a deposit account that earns 2 per cent interest, according to Mr Curran.

Your Terrible-2-YEAR-OLD SON

You've no idea what your screaming two-year-old is going to do when he grows up -- audition incessantly for the X-Factor possibly -- but if he goes to college, he'll be starting his first year in 2026.

That means you need to save between €232.91 and €295.62 a month for the next 16 years.

You'll get away with the lower monthly savings of €232.91 if your money is in an investment product that makes a 4 per cent return each year -- but if it's in a deposit account that earns just 2 per cent interest, then you need to save the higher amount of €295.62 each month.

Sunday Independent

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