How can I plan for my children's education?

Children are always asked what they want to be when they grow up. A doctor, a lawyer, an astronaut. As a parent, you want to make sure nothing stands in their way, especially something like finances.

The Cost of Learning
Funding your children's education is one of the most valuable gifts you can give them, but unfortunately, it can also be one of the most expensive.

The average cost of one year of university (tuition, fees, and room and board)* is around £8,000:

Add to that a 3% average inflation increase for college costs and these prices can skyrocket.

The average cost of four years at university (tuition, fees, and room and board)*:

Today: £32,000
Year 2021: £53,708

You're not alone if you think a financial goal like this seems intimidating or out of reach. But with careful planning and early saving, it doesn't have to be.

Your Savings Plan
The first step in creating an educational savings plan is to estimate how much money you may need. To reach this number, you should take into consideration the type of school or university (public or private) your child may be interested in, your time horizon and, of course, inflation.

Starting early and investing consistently are two key factors to reaching your goal. For example, look at how your savings could grow if you start when your child is a newborn.

Child's age now Newborn
Current savings for college £0
Total cost for a four-year public college in 2021 £53,708

Assuming an 8% investment rate of return, this goal can be reached with:
Monthly investment £132
Or
One lump sum investment £13,980

This calculation includes the estimated cost of attending school/university, including tuition, fees, and room and board. It assumes monthly savings will stop once the child starts. Rate of return is for illustrative purposes only; it does not represent any currently available investments.

*Source: BBC News website and Edward Jones 2003.

This is not to say that the only way to reach your goal is to start saving when your child is a newborn. We also understand that not everyone is able to save hundreds of pounds a month - but that doesn't mean sending a child to college is any less realistic. If your savings won't be able to cover all of your college costs, other family members may be able to help out and you can also look into student financial aid, scholarships, grants, loans and work-study programmes.

Your Next Step
We can't stress enough the importance of early planning, but if you haven't started yet, don't panic. Contact your local financial adviser, who can help you with your savings goals and make sense of the different types of college savings plans that are available. We can also help you explore investment options and see if financial aid might be able to fit into the picture.