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How to manage €13,000 bill for child’s first year in university

Parents of the 120,000 students who get their Leaving Cert results this Wednesday are facing a bill of as much as €12,800 to put their child through their first year in college. It currently costs €12,828 a year to put a child through college – if he or she is living away from home and renting in Dublin for nine months, according to the latest cost of student living survey by the Dublin Institute of Technology (DIT).

That cost falls to €11,829 a year if the student is renting outside Dublin – or to almost €7,000 a year if the student can continue to live at home.

The DIT survey takes into account the cost of rent, utility bills, food, travel, books, clothes, medicine, mobile phones, social life – as well as the student contribution charge. Rent is by far the highest cost faced by students living away from home. The average cost of rent for a student in Dublin is €541 a month, according to DIT. However, if the student were to rent a one-bedroom apartment in Dublin 2, he could expect to pay an average rent of €1,817 a month – based on the findings of Daft’s latest rental report. Rent paid at that €1,817 monthly rate would push up the cost of sending a child to college to €24,300 a year.

As a typical third-level education course runs for either three or four years, the cost of sending a child to college is one of the biggest bills parents will ever face. There are some steps you can take however to keep that bill in check – here are some of them.

Get tax back
At €3,000 per student, per year, the student contribution charge is a big hit to the pocket. The tax relief on tuition fees allows you to claim back up to a fifth of the cost of the student contribution charge – for any second or subsequent children in third-level education. This tax relief is worth €600 if you have two children in full-time third-level education. However, you cannot get tax relief on the student contribution charge if you only have one child in college. You may also be entitled to tax back if you are paying tuition fees for a post-graduate or part-time course – or if your child is repeating the year.

Avoid or limit rent
As it is more than €5,000 cheaper a year for a student to live at home than to pay for rented accommodation, avoid going down the rental route – if it’s feasible and practical to do so. Should your child be facing a four-hour (or more) return trip to college every day, however, renting may be unavoidable. Explore all your options if your child must rent. Should you have a relative living near the college, he or she could earn up to €14,000 tax-free rent a year (under the rent-a-room scheme) by renting out a room in their home to your child.

The cheapest rent is typically available to those who stay in ‘digs’ or who share accommodation. Shop around though. For example, it can cost anything from €450 to €800 a month to rent a room in a house near University College Dublin (UCD) over the student term, according to recently advertised student accommodation. Be aware that some accommodation is only available to rent from Sunday to Thursday nights – with students expected to return home at weekends.

Campus residences may work out cheaper than renting privately – though this isn’t always the case. For example, it costs between €6,629 (about €736 a month) and €11,347 (about €1,260 a month) to rent campus accommodation in UCD from August 30 to May 20, depending on the accommodation chosen. It costs between €5,395 and €5,729 to rent a single room in Dublin City University’s campus accommodation from mid-September to late May.

Remember, it can be difficult to get an offer of campus accommodation – particularly if there is a long waiting list. Should you be considering renting private accommodation, be on the alert for rental scams – make sure the property is genuinely available to rent and that the person advertising the property is not a fraudster.

Grab all discounts
Be sure your child gets all the discounts they’re entitled to, as this should help limit day-to-day living costs – particularly travel. Students usually get discounted travel rates (as well as various other discounts) and may still even qualify for child fares. The child Leap card, for example, can be used up until age 19. This can reduce the weekly cost of travel by over 60pc, according to DIT.

Borrow cheaply
Many parents have to borrow money to fund a child’s third-level education. You could pay twice as much – or thousands of euro more – for a loan than you need to if you don’t shop around for it. For example, it would cost €2,593 to borrow €10,000 from Permanent TSB over four years – through its personal loan. However, it would cost you either €1,302 or €1,510 (depending on whether or not you qualify for the bank’s discounted personal loan interest rate) to borrow the money from KBC Bank instead. Should you qualify for the discounted rate on Ulster Bank’s fixed rate parental loans, it would cost €1,550 to borrow €10,000 over four years; otherwise, it costs €1,759. Bank of Ireland charges 7.5pc interest on a personal loan of €10,000 – which would cost €1,551 in interest over four years.

Along with Permanent TSB, AIB and Avantcard worked out pricey for a four-year personal loan of €10,000. It costs €1,812 to borrow €10,000 over four years through AIB’s personal loan; it would cost €1,854 to borrow the money from Avantcard – as long as you have an excellent credit history. (Avantcard’s personal loans are more expensive for those with poor credit histories).

AIB also offers loans to parents and students seeking to cover the student contribution charge. The interest rate on this loan is 8.45pc.

Don’t rule out your local credit union if you must borrow for college fees as it may work out cheaper than your bank. St Raphael’s Garda Credit Union, for example, offers an education loan with an interest rate of 4.59pc.

Save early
It currently costs €51,000 to send a child to college for four years – assuming they are living away from home and studying in Dublin. The best way to prepare for – and limit the cost of – college bills is to start saving for your child’s third-level education when they are very young.

Should you only have five years to go until your child starts college, you would need to save €807.57 a month to hit a €51,000 target – assuming you’re making a 2pc return on your savings each year, according to figures compiled by Colin Davis, savings specialist in Curran Financial Services. You can’t afford to take much investment risk with your money if you have five or less years to save up for college bills so a 2pc return is probably the best you can expect.

Should you have 10 years to save, you need to save €345.20 a month to hit a €51,000 target – assuming you’re making a 4pc annual return on your investment, according to Davis.

You’d need to save €174.79 every month if you have 15 years to save the money up – assuming your investment is making a 6pc return, according to Davis. “When it comes to saving for your children’s education, the most important thing to do is start early,” said Davis. “Building a fund for a five-year-old is far more affordable than building one for a nine-year-old. Our figures show that you need to save approximately €80 per month more for the nine-year-old than the five-year old to achieve the same target.”

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