How to pay for your child’s first year in college
As first time students excitedly prepare for college life, their parents are likely to be experiencing a slightly different emotions. Many will be no strangers to anxiety as they steel themselves for the impact of paying for third level education for the first time.
Half of parents told our annual survey on college costs that they’ll cut spending on clothing/goods for other children in the family to cope financially. Close to a third will even sacrifice spending on food/groceries.
A quarter also said they will reduce spending on household bills in an effort to meet third level costs. It’s clear that paying for third level in Ireland is impacting significantly on the household budget.
Indeed, almost eight in ten parents admitted they struggle to cope with the costs.* In an effort to help with this financial juggling, we’ve put together some budgeting tips for parents paying for college costs for the first time.
Remember, you can always talk to your local, friendly credit union for additional budgeting guidance and tips.
Save Early (Like, Really Early) to Pay for College
Nine in ten parents told our survey that they pay for their child’s third level education. They estimated that they spend on average €534 each month on college costs. The numbers meanwhile saying they spend more than €1,000 per month paying for college costs is rising steadily. If we take the college term as being nine months, these parents are facing a bill of €9,000 per college year per child!
Looking at parents paying the average cost, it will still cost a substantial €4,806 per year. So the advantage of saving early to pay for third level goes without saying.
Experts agree that you should start saving once your child turns five. At that stage, it is affordable enough to save each month. The longer you leave it after that, it goes without saying that the more you need to save per month. This will impact on the household budget in a much more significant way.
Take heart however - it’s never too late to start saving. On average, parents in our survey had been saving for seven years to pay for their child’s college costs. They had managed to save just over €5,100.
Your local credit union is a trusted and reliable institution to save in order to pay for college costs. To save with a credit union, you must first join the credit union which is a very straightforward and easy process.
There are also a range of benefits you will enjoy once you are joined the credit union. Not only that, but you can contact your local credit union staff any time for budgeting and saving guidance and tips.
Bursaries, Grants and Tax Back
Ensure you are taking full advantage of all of the financial aid available to help with paying for third level education.
For example, did you know that a large number of credit unions offer bursaries and scholarships for those going to universities and college? Make sure you contact your local credit union to find out if they are offering a bursary/scholarship this year. Many offer very generous bursaries which go a long way towards paying for the costs of third level. The format of these awards vary widely, as do the terms and conditions which apply. Some credit unions base the award on academic qualifications, while others run an open draw. The majority require that either the student is a member of the credit union, or the son/daughter of a member. If you’re not a credit union member, then why not join today?
The Student Universal Support Ireland (SUSI) is the single, grant-awarding authority for all of the student grants available. You need to apply online, and can generally do so from mid-April until a closing date, usually in July. You do not need to know the course that your child will be doing in order to apply for the grant. You can consult SUSI’s Eligibility Reckoner to figure out if your child is eligible.
If you have more than one child in college, you can also apply for tax back on the student contribution fee you pay (i.e. you cannot claim tax back on the first €3,000). More details are available on the Citizen’s Information site.
Student Rent – Is it Really Necessary?
Does your child really need to live away from home during their first year at college? If your child is attending a third level institution within commuting distance, avoid paying rent. Simple as. This will take significant stress out of paying for college. Rent, unsurprisingly, is the biggest monthly expense incurred by students and their parents. Students in our annual survey said they were paying on average €343 per month on rent. If your child is attending college in Dublin, this will be significantly higher. Check out our blog for more on student rental prices by county (you may need to sit down for that one).
Students living away from home also told our annual survey they end up spending double per month than those living at home. Students renting said they were paying €1,229 a month compared with €667 for those living at home! So, there are significant savings to be made on paying for college by cutting out rental bills.
Limit Rent if You Have No Choice
If the distance is simply too far for your child to travel each day, look at other options before you decide to rent. Do you have a relative or close friend living close to the college? They could earn up to €14,000 tax-free rent for the year under the Rent a Room scheme.
Another option, which is seeing a return to popularity, is the student digs. This is an arrangements whereby students live with a family for the academic year, and can even opt to have their meals included. This works out significantly cheaper as not only is the rent cheaper, but many overheads, such as electricity bills etc., are included in the rate. The Union of Students in Ireland (USI) is actively promoting digs as an accommodation option, check out their dedicated Homes for Students website. Their downloadable accommodation guide is also very useful for parents faced with paying for third level for the first time.
If you Need to Borrow – Do it Wisely
Ok, we know we’re biased on this one. Realistically however, if you need to borrow to pay for your child to go to college, the smartest way to do it is a credit union loan. And here’s why. A credit union loan is an affordable loan with flexible repayment terms. Repayments are not dictated by us, but established in agreement with you - the borrower. You have the option to restructure the repayments if needs be, and you can also top up the loan should you need to.
There are never any hidden fees and charges with a credit union loan. Not only that, but credit unions love to say ‘yes’ to loan applications. Our latest statistics show that 95.5% of credit union loans are approved**. Check out our blog for more on the full range of unique benefits of a credit union loan. Applying for a credit union loan is very straightforward and you can apply in person, online or over the phone in most credit unions.
To get an idea of how much a student loan might cost at your local credit union, contact your local credit union.
ILCU Third Level Costs Research 2018
**ILCU Marketing & Lending Survey 2019, applies to standard loan applications which were completed in full