It is estimated that the actual current cost of raising a child from birth until completion of their third 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 per cent of parents surveyed for the study said that any further reductions in the child benefit allowance would leave them in a "financially difficult" position when it comes to funding their children's education.
With the recent inflation figures, it is somewhat comforting to hear the government is contemplating doubling the Child Benefit for the coming Christmas to €280.
I had worked out though 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 reaching your 18th birthday – fund the 18th year yourself, assume a growth rate of 5 per cent each year (though for the years 1991 to 2020, the average annual stock market growth was 10.72 per cent), you would wind up with c. €42,000 – the exact amount required to fund your child’s entire third level education.
When I tell you that 95 per cent 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 third 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. 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 here to check the specifics and see if you qualify.
There are other special grants for those in need too – click here or look into the 1916 Bursary Fund.
When it comes to managing the money you do have, 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 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.
Of the two pillar banks, AIB offer 8.5 per cent (€3,000 over 1 year will cost €261.22 per month – interest for the year amounts to €134.68) while Bank of Ireland offer 5 per cent (€256.67 per month and an annual interest of €80.04).
Credit cards are a minefield. Most students do not have the income to repay so therefore knowing the interest rate chargeable is important. 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, check the Competition and Consumer Protection Commission for current account comparisons to find the one that suits your needs best.
I would certainly suggest a student budget exercise. 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.
The views expressed here are those of the author and do not represent or reflect the views.