My daughter graduated this year - a Masters in computer science - and was among the first to have a virtual graduation ceremony. How life has changed. 2020 has seen the Leaving Certificate abolished and replaced with a grading system due to the pandemic, but students are still being enrolled for 3rd level courses everywhere.
Life goes on and funds still has to be found to cover the expenses and registration fees. It is estimated that the actual current cost of raising a child from birth until completion of their 3rd level education is just short of a whopping €240,000.
Recent Bank of Ireland research revealed that 80 per cent of parents said they do not believe the current State Child Benefit of €140 per child is sufficient to help them with their children's education expenses.
In addition, 86% of parents surveyed for the study said that any possible further reductions in the child benefit allowance in next month’s Budget would leave them in a "financially difficult" position when it comes to funding their children's education.
Inversely 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 on the 18th birthday – fund the 18th year yourself, assumed a growth rate of 5% each year, you could wind up with c. €42,000 - the exact amount required to fund your child’s entire 3rd level education.
Kept in a jar by the door – no interest – would realise €28,560 – still some € 14,000 shy of what you need for one child’s 3rd level costs.
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.
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 by paying 30% of each month’s income. It is inbuilt with their mortgage/rent payments. Here in Ireland, we are a far cry from that where the parents are saddled with this debt from day one.
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 on the link to check the specifics and see if you qualify - https://susi.ie/eligibility-reckoner/
One of Simply Red’s best-known songs says it all: Money’s too tight to mention. 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 social-distancing in McDonalds and Eddie Rockets might mean you have the fare to get home or pre-packing your own lunch will be even cheaper. Your student card can also sometimes be a God-send.
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 especially now when they are being charged on their customers’ surplus cash by AIB Bank and Bank of Ireland.
Of the two pillar banks, AIB offer c. 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 now offer 5% loans over 5 years, with a 3 month moratorium at the start ( €188.14 per month for €10,000 – the maximum you can borrow).
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 have the best deal on a maximum credit limit of €1500…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 €1500 the monthly repayment including the €30 government stamp duty will be €127.50 per month – tough when you have to study too.
An Post Money’s new credit card (they offer 0% for 12 months on balance transfers) should be checked out while Revolut has already established itself in the Irish market.
When it comes to current accounts, again, KBC Bank would have the edge. None of the providers including the pillar banks charge fees though the government still have their stamp duty charge on debit and ATM cards of 12 cent per transaction (to a maximum of €2.50 for ATM cards and €5 for both ATM and debit cards).
Bank of Ireland have just recently announced charges to their charges from November (basically €6 per month standing charge) Check out the Competition & Consumer Protection Commission’s website – www.consumerhelp.ie/currentaccounts for comparisons.
I would certainly suggest a student budget. You should know what your total expenses are in relation to the income/grant coming in. 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.