Preparing Financially For University
In the past year or so universities and their tuition fees have been something of
a hot topic amongst students, parents, the government and the media alike. With most universities in England now choosing to charge up to 9,000 per year in tuition fees it is no surprise that everyone is airing their opinions on the subject. Choosing to go to university can be a big decision and these changes to the fees have made the decision feel much more monumental for both parents and their teenagers, especially in terms of finding the money to pay for it. This article aims to outline some of the things parents can do to help prepare themselves and their children financially for university.
For many new students, their undergraduate years at university will be the first time that they have lived away from home and the first time they have had to properly manage their money. An important thing that parents can do before their children leave the nest is to teach them how to budget properly. Many observers have pointed how finance and money-managing is not taught to a good enough standard, if at all in schools in the UK. Through teaching your children how to budget you are helping them to understand what they can and cant afford and to help them prevent falling into large amounts of debt. Before they leave for university you could help them draw up a practice budget for when they are at university make sure to cover the essentials such as accommodation, food, any extra course costs and travel.
Another way that parents can help to prepare their children for university is to find them a good student bank account. In many cases banks will offer perks with the accounts that may be beneficial. An interest free overdraft is hugely important as it can be a cheaper way of borrowing money if funds get low, especially when compared to credit cards or bank loans. Many accounts also offer an online banking service which is an easy way for your son or daughter to stay on top of their money. Some banks offer a student rail card or travel insurance make sure to look around in order to find the best one for your childs needs.
Many parents whose children have gone through university know all too well about the pre-university buying of supplies. In most cases this will include household items such as duvets, pots and pans, cutlery, plates and stationery. You can save a substantial amount of money by shopping around and trying to find the best price rather than simply grabbing the first things you see. Another money-saving tip for parents of students in private accommodation is to ensure that they are not paying council tax as students they are exempt. This is not automatically applied so make sure that your child knows they have to apply for a Council Tax Exemption Certificate.
Tuition fees may seem daunting but your child should not have to pay them off straight away before attending university. They can apply for a student loan that is split into two parts: the tuition fee loan that is paid to the university directly to cover the fees and the maintenance loan that is designed to cover the costs of living. The maximum amount that a student living away from home (not including students in London who receive a higher amount) could receive in 2011 was 3,838. All UK applicants are eligible for seventy-two per cent of the maintenance loan the rest is dependent on the family income. You will need to ensure that your child is receiving the full amount that they are entitled.
One of the best things a parent can do to prepare financially is to start saving early. Put money away when you can. This money can be used to help if your son or daughters funds get too low or if you want to make a monthly contribution to their rent or living expenses. Making a contribution can be very useful, especially if your son or daughter does not qualify for any income assessed loans or grants. Putting aside money can also be beneficial when it comes to paying back student loans. Many observers, however, would not recommend using the money to pay off your childs student loans straight away as you may end up losing money by paying things you didnt need to. Student loans are cleared 30 years after the first repayments start, in many cases this means that the debt could be cancelled before it is completely paid off. If your child starts university in 2012 and once they graduate they never earn over 21,000 they will never have to start repaying their loan. Ideally, many analysts recommend that you put the money in savings, either in an ISA or a Junior ISA to benefit from tax-free interest or from having the savings in your childs name once they turn 18 and to wait and see how your childs earnings progress.
by: Izzy Evans
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