Ease the pain of meeting your child's college fees
It could cost more than your mortgage to send the kids to college. How can parents ever hope to meet the costs, asks Louise McBride
Students took to the streets in their droves last Wednesday to protest against the expected hike in college registration fees. Despite their rally, it looks like they'll have to swallow fees of at least €2,500 from next September -- almost double the current €1,500.
The increase, which is being mulled over by the Government and is expected to be unveiled in next month's Budget, could even push registration fees as high as €3,000.
Of course, in the vast majority of cases, it will be parents -- rather than the protesting students -- who will have to foot any increase.
University tuition fees were abolished in 1995. However, it can still cost parents about €42,000 to send a child to college for four years, according to Bank of Ireland and the education website, Schooldays.ie.
That includes the cost of study books and materials, clothes, food, transport, rent, bills, pocket money and registration fees.
If you've more than one child, you're in deeper water -- it could cost a whopping €250,000 to send four children to college, according to Ross Curran, managing director of the financial advisers Curran Financial Services.
"The first thing you need to do to provide for your children's education is to start saving," said Gary Connolly, principal of the investment consulting firm, iCubed. "Then decide if you can afford to -- or are willing to -- take on a higher-risk investment product than a deposit account.
"If you've got 10 or 15 years to save for your child's education, you can afford to take a level of risk beyond deposit."
Be careful about taking investment risks for your children's education, though.
"For most people, this is far too important a financial goal to be taking any major risks," said Curran. "There is an advantage to getting higher rates of investment return over time but while a 2 per cent return (on a deposit account) seems low, it would be secure.
"Indeed, looking at stock market savings plans, a return of 4 per cent after tax and charges would require the underlying investment fund to make a return of between 7 and 8 per cent a year.
"Funds aiming for that kind of return will have to have the potential to drop below whatever money you've put in -- and that may not be suitable for this type of saving. If you are willing to take that risk, or indeed need those returns to get to your target figure, it would be much more appropriate to talk to an independent, fee-based adviser."
If you opt for an investment product, watch out for expensive charges, such as annual management fees, entry charges (which can eat up a big chunk of your monthly savings) and exit charges (which can be charged if you have to cash in your investment earlier than expected).
DON'T LOSE 'FREE' FEES
It is important not to let any of your hard-earned savings go up in smoke by allowing your child to drop out of college or to repeat a year. Your child will not usually qualify for "free" tuition fees if he or she is repeating a year.
Similarly, if your child attended a third-level course within the past five years but did not complete the course, you could have to cover the tuition fees for the times your child attended college.
Whatever the reason, if you have to foot the bill for university tuition fees, make sure you claim back any tax you're entitled to.
You can claim back a fifth of certain tuition fees in tax relief each year -- up to an annual limit of €5,000.
A few grand in tax back certainly isn't something to be sneezed it. For example, as it costs €12,487 to study DCU's Higher Diploma in Children's Nursing, tax relief will put about €2,500 back into your pocket, bringing the cost of the course down to €9,990.
It costs €15,600 a year (that's €62,400 in total over the four years) to study veterinary medicine in UCD. Tax relief will knock €12,480 off that bill, reducing it to €49,920.
You can only claim tax relief for courses approved by the Revenue Commissioners. To find out what the approved courses are, visit www.revenue.ie or www.studentfinance.ie. But you can't claim tax relief on registration, examination or administration fees -- so there'll be no way to ease the blow of any hike in registration fees in next month's Budget.