Parents Should Plan Ahead to Ease the Financial Headache of a Child’s Education Expenses
Research announced today [27th July 2009] by Bank of Ireland Life in association with online parent resource Schooldays.ie, reveals that parents now more than ever, need to plan ahead to make sure they can fund the costs associated with educating their children.
Estimates count the costs associated with children’s education from primary school through to college at almost €70,000 (Primary – c. €12,000, Secondary – c. €13,000, 3rd level – c. €42,000).
€42,000 for 3rd level education does not include any re-introduction of college fees, indicating the high cost of putting your child through 3rd level before any new fees are taken into account.
The savings and investment arm of the Bank of Ireland Group believes that the high cost of the nation’s current free education system will come as a shock for those parents who have no savings plan to call on to meet these future expenses.
Highlights from the research include:
- 43% of parents say that 3rd level costs are the most expensive years of a child’s education, however over half (54%) of parents have no savings plan in place to help fund these
- 80% of parents do not believe that the current State Child Benefit of €166 per child is sufficient to help them with their children’s education expenses
- 86% of parents say that any reduction in the Child Benefit allowance will leave them in a financially difficult position when it comes to funding the cost of their children’s education
- 78% of parents will experience financial difficulty as a direct result of the announcement to cease the Child Benefit for those over 18 years and in full-time education from 2010
- Just one-quarter of parents (25%) save the monthly Child Benefit, with 40% of these parents opting to do this with a long-term investment plan
- 67% of parents think that the best time to start saving for the cost of their child’s education is when they are 0-4 years old.
To help save money in the downturn, parents are already making changes to their spending habits to reduce costs as much as possible:
- 50% of parents plan to buy a larger size school uniform for their children this school-year
- One in five parents plan to reduce their children’s weekly pocket money by an average of 50% as they experience financial challenges
- Nearly one in three parents will spend less on extra-curricular activities for their children due to the current economic environment
- 56% of parents will make sure they go through Irish recycling and community websites for free and second-hand schoolbooks, schoolbags, and uniforms
- 71% of parents (up 9% on 2008) believe that their children should wear their school uniform on Communion and Confirmation Days
94% (up 5% on 2008) of parents feel pressured to contribute to the running of the school through sponsored events (94% of parents responding had children attending public schools), with 73% of parents giving their children additional money for school supplies and fundraising events at least once a month.
Regular changes in the schoolbook curriculum also cause a big headache for 98% of parents looking to buy second-hand books, and in particular for those looking to save money by passing schoolbooks on to other siblings.
Bank of Ireland Life has put together a breakdown of typical costs of educating your child through primary, secondary and 3rd level education.
|Expenditure||Annual € Primary*||Annual € Secondary*||Annual € 3rd level**|
|Study Books and Materials||180||331||585|
|Uniform (Clothes for 3rd level), Sports gear and Shoes||224||289||450|
|Lunch / Food||343||419||1,634|
|Public Education Registration Fees / Voluntary Contribution||173||189||1,550*|
|Computer and Internet access
(Average Laptop €499; Broadband Value Pack over 9 months)
|198||198||198 + once off cost of laptop|
|Rent (outside of Dublin)||–||–||3,285|
|Utility Bills (Electricity/Gas/Bins/Phone)||–||–||613|
|Pocket Money (over 9 months)||145.80||478.44||1282.68*|
|Years in Education||8||6||4|
*Source: Bank of Ireland Life and Schooldays.ie market research May 2009
**Source: DIT Campus Life (Cost of Living Survey 2008/09)
Commenting on the research results, Eoin Kennedy, Head of Products, Bank of Ireland Life said, “Now, more than ever, parents need to start planning ahead for the significant costs associated with their children’s education. What is supposed to be “free” obviously from looking at the results of our survey is not really the case. I think we as parents are even more keenly aware of the need to save for education given the current economic climate, none of us want our children to suffer in the future because we didn’t plan now.”
Most parents agree that the best time to start saving for their children’s education is from day one, and we agree. In fact, if even €150 a month was saved over the Primary and Secondary school years and put into our SmartChoice Education plan, parents could end up with a lump sum of over €31,000 to help towards the various costs associated with children’s 3rd level education.”
“Better again, those who could afford to divert even half of the average monthly créche fee of €800 into a regular savings plan for the Primary school years alone, could potentially benefit from a lumpsum of up to €43,000 to put towards the cost of both secondary and 3rd level education.”
(See Table at end of next page for further details of these assumed figures)
“The Government have been quite vocal that 3rd level fees will be re-introduced in some form sooner rather than later. At this time we don’t know what exactly this will be and even if the onus is placed on graduates rather than parents, it is still obvious from our research that there are other significant costs that parents will need to cover. Putting plans in place now to help fund these very expensive 3rd level education years is vital for parents and something we strongly recommend.”
Annemarie Wade of Schooldays.ie commented that parents are taking their time this year before purchasing all the back-to-school necessities and are researching extensively online to try and reduce their costs. Schooldays.ie has put together some great deals on both schoolbooks and uniforms for parents and has also put in place a free facility allowing parents to sell and exchange second hand school books which is proving very popular. As part of Bank of Ireland Life’s research parents estimated that they spent an average of €654 per year at Primary school level and €666 per year at Secondary school on extra curricular activities such as dance, swimming and piano lessons.
|Examples of ways to Save for your Children’s Education||Monthly Savings Amount||Term of Investment||Projected Fund value at end of term|
|Child Benefit: €166||€150||14 years of Primary and Secondary School||€31,290|
|Créche Fee: €800||€400||8 years at Primary School||€43,549|
Projections are based on the policy value of a Bank of Ireland Life SmartChoice Education plan over the specified investment terms after the payment of taxation (currently 28%). Projections assume a growth rate of 6% per annum, which is not guaranteed, and no lump sum payment.
Warning: These figures are estimates only. They are not a reliable guide to the future performance of this investment.
Notes to Editors:
Research conducted by Schooldays.ie on behalf of Bank of Ireland Life in April and May 2009, with a nationwide sample of over 470 parents with children in primary, secondary and 3rd level education.
The State Child Benefit monthly rate for children under 18 for the first child is €166 as at July 2009.
Schooldays.ie is Ireland’s Online Resource for Parents and Teachers. Established in 2006, the website provides comprehensive information for parents on schools, parental resources, afterschool activities, mid-term camps and family milestones such as Communions, Confirmations, Debs and Birthdays. Teachers can source information on school tours, roadshows, competitions and school year events.
SmartChoice Education is Bank of Ireland Life’s most popular product solution for parents looking to save for their children’s future.
SmartChoice Education is a regular savings plan linked to the stockmarket that includes an innovative 25% loyalty bonus for those who commit to saving regularly for a period of 7 years. In the first year of the plan, Bank of Ireland Life invests an amount equal to 25% of the customer’s initial annual contribution. Provided regular contributions are maintained for a period of seven years the investment value of the bonus will be allocated on the seventh policy anniversary.
SmartChoice Education requires a minimum payment of €100 per month and has a wide range of investment funds for customers to choose from. SmartChoice Education has a minimum investment period of 7 years.
Fees and Charges:
- 5% contribution fee for investment amounts of up to €12,000 per year
- 3% contribution fee for investment amounts of over €12,000 per year
- Annual fund management fee of currently 1.5% per year
For further information contact:
Group Consumer Communications Manager
Bank of Ireland
Tel: 01 604 3750
Mob: 087 226 9324