It is expected that almost three quarters of English universities will be charging the maximum fee of £9,000 in 2012 and it is estimated that students starting university courses in the UK can expect to graduate with between £20,000 and £30,000 debt.
As undergraduates in the UK prepare for their last academic year before tuition fees potentially triple in 2012, financial experts are warning that parents should start planning now to fund their children’s further education.
Overall, it is expected that almost three quarters of English universities will be charging the maximum fee of £9,000 in 2012 and it is estimated that students starting university courses in the UK can expect to graduate with between £20,000 and £30,000 of debt.
“Parents are not only being hit by the huge increase in university tuition fees, but also by the rising costs of student accommodation and general living costs,” explains Clarion’s private client practice. “The total costs facing those starting degrees in 2012 are now estimated to be £48,409 and parents need to start planning how this will be funded as a matter of urgency.
“While some may be able to provide funding from their income, many parents who want to contribute over and above student loans will need to consider the most effective way of saving in advance. Parents or grandparents may choose to set up an account for future education costs – this can be done more efficiently through a trust – and is also good for tax planning purposes to ensure the money is out of parents/grandparents estates for inheritance tax purposes.”
“There are also plenty of saving ‘products’ on the market to ensure funds are maximised through investment – IFAs and specialist education financial planning firms can provide advice. It may be possible for parents with businesses to set aside income for children for education purposes.
“If parents are funding the purchase of a property for the child/student, they should consider carefully how that support is protected to ensure that the property is used for the purpose intended. If it is a loan, they need to be aware that this is less efficient for inheritance tax purposes although it has the advantage of being more secure – without a formal loan, the property could be sold and the proceeds used in a way not intended by the parent. Alternatively, the property could be bought in the parent’s name or title shared with the child.”
“Recent research* indicates more than half of parents with children under the age of 18 have not yet started saving towards the costs of higher education, but with rapidly escalating costs facing families next year, rethinking contributions to children’s university education is a matter for urgent attention."
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*According to research from HSBC