University fees planning

Transcription

1 University fees planning Investing in your future generation

2 The facts 73% of all students will still be unable to pay off their loans after 30 years * 13,909 The average total expenditure per year (including tuition fee costs and living costs for full time students) 13,909 ** Starting salary of a graduate (based on UK s leading graduate employers) 30,000 *** Average living cost for a full-time student 6,705 ** Source * ** attachment_data/file/301467/bis studentincome-expenditure-survey pdf *** market/gmreport17.pdf

3 Is it worth it? That depends on whether you see a university education as an expense or an investment. It is a major cost, that s for sure, but it is a way of giving your child or grandchild a head start in life. It s also no surprise that employers are prepared to pay more to hire people with recognised qualifications. Looking to the future As an example, if university costs for a three year course increase at say, 2.5% each year, and looking ahead you are planning for your child or grandchild to attend university in 10 years time, you ll need to consider investing to have 53,000 available. 53k Student loans Students can currently apply for loans worth up to 9,000 (in England) from the Student Loans Company as part of the Government s financial support package. For more information on student loans visit: Savings There are several ways to go about saving up for university. To a large extent, your options should be governed by the length of time you have before your child starts their course. Here are some of the key ways you can start saving. These will depend on if you have a lump sum to invest or looking at saving on regular basis. Investment bond > An investment bond is generally a single premium life insurance policy. > There are often minimum investment levels that may range from 1,000 upwards and can typically be set at 10,000. > Regular withdrawals can be taken. However, there may be tax liabilities on withdrawals. > You can assign an investment bond to a lower tax payer at a future date i.e. your child or grandchild. Please note: The value of an investment can go down as well as up and is not guaranteed. You could get back less than you have paid in.

4 Individual Savings Account (ISA) ISAs are tax efficient savings accounts. Any interest earned will be tax-free. > Each tax year, which starts on 6 April, you get a new ISA allowance. For the tax year , the ISA allowance is 20,000. > You can choose to pay in regular instalments, such as monthly or as a lump sum. > Some ISAs will allow instant access to savings. Junior Individual Savings Account (JISA) JISAs are tax efficient savings accounts designed to help you save or invest for your child s future. > Each tax year, which starts on 6 April, you get a new ISA allowance. For the tax year , the JISA allowance is 4,128. > The money can t be accessed by your child until they re 18. > If your child is 16 or 17, they can open their own JISA. > Friends and family can contribute to a child s JISA up to the allowance.

5 Summary These are just some of the options that are available for saving for your child s or grandchild s education. All of which offer different tax advantages depending on your circumstances. This is where seeking financial advice can be beneficial. A financial adviser can talk you through the options available to suit your own financial situation. Speak to your financial adviser to discuss the options available to you. The information in this leaflet is based on our understanding of current taxation, legislation and HM Revenue & Customs (HMRC) practice, all of which are liable to change without notice. The impact of taxation (and any tax reliefs) depends on individual circumstance.

6 GENM /2017