I have a message for all those Leaving Cert students who have been accepted for 3rd level education – congratulations, well done but you don’t realise how lucky you really are.
In the UK the average student debt is £44,000 (€51,163) while in the USA it is even greater where the average student accepts that they will have to repay their student debt for the first 10 years of their working life.
Harvard, for example, costs over $150,000 for the privilege of their parchment. That loan is inbuilt with their mortgage/rent payments. Here in Ireland, we are a far cry from that where the parents are generally saddled with this debt from day one.
Old time music hall comedian Tommy Trinder in his well-known catch phrase said it succinctly…" you lucky people!"
I worked out that if you invested that €140 Child Benefit each month in a stock market managed fund from the first month your child was born, continued it for 17 years – it finishes at age 17 – fund the 18th year yourself, assumed a growth rate of 5% each year, you would wind up with c. €42,000.. the EXACT amount required to fund a student’s entire 3rd level education.
Now when I tell you that 95% of households use the Child Benefit for the precise reason of their introduction... to help families financially with their week to week living costs...you can understand why many families are under great financial strain when their children actually reach 3rd level.
For those with limited income, you can apply for a grant – SUSI (Student Universal Support Ireland) is a complicated grant process and outside most families’ eligibility especially those in the middle-income bracket.
Click here to check the specifics and see if you qualify.
One of Simply Red’s best-known songs says it all Money’s too tight to mention and I am sure I do not need to repeat the advice to students reading this – shop around and also look for value.
The difference between McDonalds and Eddie Rockets might mean you have the fare to get home!
Your student card can sometimes be a Godsend.
As far as the financials are concerned, when it comes to student loans I would always check out your local credit union first – they generally have the best rates and are the most flexible.
Of the two pillar banks, AIB offer 8.5% (€3,000 over 1 year will cost €261.22 per month – interest for the year amounts to €134.68) while Bank of Ireland offers 9.7% (€262.76 per month and an annual interest of €153.16)
Credit cards are a minefield. Most students do not have the income to repay so, therefore, knowing the interest rate chargeable is important.
KBC Bank has the best deal on a maximum credit limit of €1,500…on purchases, their interest rate is 18.25% (the lowest!) while on cash withdrawals from ATMs, the rate is 20% (the lowest).
Late payments will attract a charge of €7 - so don’t be late. Should you 'max out' your card, you will be required to repay over a 12 month period – so on a limit of €1,500 the monthly repayment including the €30 government stamp duty will be €127.50 per month – tough when you have to study too.
When it comes to current accounts, again KBC Bank and Permanent TSB would have the edge.
For a comparison on all the current accounts on offer with the various banks, the Competition and Consumer Protection Commission (CCPC) have an invaluable website that you can access here.
I would also certainly suggest a student budget exercise. You should know what your total expenses are in relation to the income/grant coming in before you start your first term.
You have two choices if your expenses exceed that income – earn more or cut costs.
Remember US President Benjamin Franklin’s wise words: "Rather go to bed supperless than rise in debt." Enjoy your studies but have fun.
For more information click on John Lowe's profile above or on his website.