The Student debt crisis in the U.S. gets a lot of attention, but it’s not the only country with its fair share of problems. UK tuition fees are the highest in the world for undergraduate students. The justification is that the high wages a degree affords will repay the cost of the education many times over.
According to the Organisation for Economic Co-operation and Development (OCED), the average English undergraduate paid slightly less than £6,000 in tuition fees each year at public universities. The U.S. came in at second place with fees around £5,300, but a majority of U.S. educational institutions is private rather than public, thus affecting the result.
Nonetheless, the UK is the most expensive out of the 34 industrialized countries that were evaluated by OCED. This means that parents have to start saving to offset the cost of any student loans their child may need to incur later on. A popular type of savings plan is a University Savings Plan, which is an investment. An investment is a risk because poor investment conditions may result in getting back less money than what was paid in. However, a good investment can pay off significantly. Money also can’t be withdrawn from a University Savings Plan prematurely or a surrender penalty could be paid. Another option is an interest-bearing savings account.
Student Loan Debt in the UK
Loans and grants are available to UK students. Student Finance England is the federal financial aid system. New students from England, continuing students, new EU students, and continuing EU students can apply. Those from Scotland, Northern Ireland, and Wales can, as well, but the process is different.
To apply, students set up an online account, log in and complete the application online, send in proof of identity when needed, and then sign the loan declaration that discloses the aid amount and return it. When completing the application, the household income of the student and/or the student’s parents must be provided.
Private student loans also are available. These loans are funded by investors, which means the investor makes back the money and more once repayment begins on the loan. Grants may also be provided through other entities. While education is expensive in the UK, there are different ways to pay for it. If a grant is awarded, students don’t have to repay the money they receive as long as they attend the university. If a loan is necessary, which is something parents need to prepare for far in advance, repayment strategies will be required.
It’s important for parents to realize that assuming a grant will be awarded is not enough. All parents should prepare for their child’s college education. Anything could happen to grant programs years into the future. It could be possible they cease to exist. No one can predict what might happen. What you can predict is that higher education will be expensive. It’s better to be prepared and have money in the bank than to not be prepared and your child has to bear the full cost of his or her education.
Saving for High Tuition Fees
When loans will be the only option, the loans don’t have to be for the entire cost of the student’s education. If there is money saved, that money can be applied and the remainder paid by loans. This is important because loan debt plagues students after they graduate. They have a massive debt they have to repay for an education they needed to succeed in life. Offsetting the cost just a little can make a difference in a student’s future.
To be effective at putting money in interest-bearing accounts or investment accounts, you can do things like:
- Develop ways to save money on basic needs
- Shave a couple days off a vacation and deposit the money into the account
- Take raises from work and deposit them into the account instead of spending them
- Look into other investments to diversify your portfolio and make the extra money
- Apply for scholarships that can pay a portion of the total tuition
Every day, we hemorrhage money in ways we don’t realize until it is time to cut costs and save. It is possible for you to save for your children’s future so they aren’t plagued by the high cost of UK tuition fees well into their 30s or even their 40s. Explore all avenues available to you. Even if loans must be acquired, they don’t have to be a financial death sentence when some of the cost can be satisfied by what you’ve saved.
Are you concerned about the cost of your child’s future education? Do share your thoughts and feelings in a comment below.
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