What Savings Are Needed To Fund Education Costs?

I have 2 children, aged 3 and 6. My wish is for them to attend 3^rd Level Education once they have finished secondary school. Can you please advise what costs I can expect and also what I need to start saving in order to fund this cost.

Every parent or guardian wants to give their child the best education possible. This is especially important in today’s competitive environment where educational achievement can at least open doors for you that may allow you to secure employment

Most parents would like their children to have at least the opportunity of attending some form of 3^rd Level Education be it University, Institutes of Technology or Vocational Courses.

Given the increase in the school and University going population in the coming years and the depleted Government resources to facilitate this level of spending, it is unfortunately going to be hard to avoid the reality of increased educational costs for parents and guardians. Huge growth in demand, projected at over 70%*, for 3^rd Level places is expected over the next two decades.

The cost of maintaining a child in University or College if they are living away from home is estimated at €925 per month*, not to mention the extra costs associated with capitation fees and the possibility of additional fees for 3^rd Level being introduced over the coming years due to the unhealthy position of the State finances.

Based on your situation, a figure of €10,000 per annum may not be unrealistic. Assuming you do not qualify for any grants this figure, on a conservative basis, becomes circa €40,000 per child to pay for a 4 year 3^rd Level Education. So you need to plan for savings of €80,000 that will be needed once your first child starts 3^rd Level Education in 15 Years time.

We also need to factor in inflation over the 15 year savings period of circa 3% per annum, so the real savings pot you are aiming for becomes €125,000.

So, what level of savings do I need each year to achieve my €125,000 fund?

Based on achieving a growth rate of 4% Net per annum each year over the next 15 years, an annual savings plan of roughly €6,120 needs to be put in place.

There is an unending list of savings products on the market, right from the typical fixed / variable interest savings account up to more complex investment fund models which allow you to invest in a wide basket of assets such as equities, property, bonds and much more. What you decide to invest in is a conversation for another day but we do recommend you put some form of a plan in place to give your children the best educational leg up possible.

•  Source: Higher Education Authority, 2008
• Minister for Education & Skills – Speech given at the Royal Irish Academy 31 ^st May 2011.