Almost as soon as our children are born, we have to look ahead to their future education. It’s life’s natural path – we’re born, and before our parent’s have had a chance to truly appreciate our existence we’re on our way to school to learn the important skills that will set us up for a productive and satisfying future. Following on from school we’ll go to college or university, perhaps study a post-graduate degree and, eventually, take those first tentative steps into a long-term career that, hopefully, rewards us for the time, effort and money that we’ve invested into our education.
That’s not to say that life always works out exactly like that. There are now more and more options for people to take, but with an increased number of options there are an increased number of college and university courses for students to choose from. In the past those that didn’t want to follow an academic path would leave school and learn a manual trade, but there are now university courses teaching a far wider range of subjects than ever before. There’s something for everyone and, in turn, prices have risen dramatically.
Your son or daughter might not decide to go on to further study, but it’s likely that they will. With college and university courses costing more than ever before, it’s wise to save in advance for their bright and expensive future.
What are college saving plans?
A college or university savings plan is specifically set up to save for your child’s future education. You can save a regular and relatively small amount of money to build up a significant figure that they can later use to pay for their studies.
Currently, most students get into debt. That debt can total more than £30,000 simply for an undergraduate degree, with postgraduate study adding to the figure. College savings plans allow you to set money aside, investing a sum of your choice.
How do college saving plans work?
A college saving plan is a tax-efficient way to save money for further education. You can invest a sum up to a maximum of £2,400 a year, and start from as little as £100 a year, so there’s a suitable university savings plan whatever your personal financial situation.
You choose whether your son or daughter receives a cash lump sum when they reach the age of 18, which is typically around the time they’ll be going to university, or whether they need to complete their course to receive the money which can then be used to pay off their student loan. If you need more help paying for student loans you can get a loan. Alternatively, payments can be made at regular intervals between the ages of 18 and 21, supporting your son or daughter through their studies but keeping money back for future years.
Are there other benefits?
Things don’t always go to plan. If your child ends up ill or injured and is unable to attend college or university then you might find that there are additional costs to deal with. It could be that they return to live with you, and that you find yourself having to provide additional support. You can receive up to £200 tax-free each week to cover any additional expenses.
Additionally, though it’s not nice to think about, college saving plans allow you to plan for a future in which you’re not around. They’re one of the best ways to ensure that even if something happens to you, your child will still be able to afford an education and build a strong future with the career of their dreams. If you pass away during the term of a college saving plan then payments into the plan will continue to be made on your behalf, at the same rate that you were paying at the time of your death. It’s reassuring to know that, should the worst happen, your child’s future would still be one in which they could fulfil their goals.