Karen Watson-Brown shares how parents can prepare financially for rising education fees.
Crisis – it’s a word you can’t escape currently.
For dentists, it applies to a range of topics – costs of living, energy and, closer to home, recruitment and retention.
Next up in the headlines, it has now been reported that we face a ‘cost of learning’ crisis.
It essentially takes form in two areas. One impacts parents, with the average cost of education fees rising – particularly for those looking to put their children through private education.
Then, for students, the National Union of Students revealed that a third of students are living on £50 or less per month after paying rent and bills amid soaring inflation. When we look at dental students in particular, the BDA Benevolent Fund shared that nearly three quarters had experienced financial issues at some point in their studies. Fifth-year funding caused issues for many.
Our financial research for dentists revealed that supporting children and grandchildren financially was a key priority for a fifth of dentists over the next twelve months, jumping to a quarter for female dentists. It’s fair to say that for those individuals another ‘crisis’ will not be welcomed.
School and university fees can place demands on family finances. Education costs can be a long-term commitment. Especially if you want to pay for your child’s education from nursery until they finish university.
The cost implications
Early years childcare providers say they are ‘looking at’ whether they should raise overall fees as well as up the cost of facilities such as on-site meals for children to try to make up some of the shortfall from government funding and rising costs, Jonathan Broadbery, director of policy and communications at the National Day Nurseries Association, said earlier this year.
The Sunday Times revealed that the average cost of boarding school education is forecasted to pass half a million pounds for a child who starts school this year and boards from the age of seven.
Universities and colleges that receive a Teaching Excellence Framework (TEF) award can increase their fees in line with inflation. This is currently in double figures and at its highest rate in 40 years.
These costs are a major financial outlay for most families. They don’t include extra costs such as uniforms, books and school trips. Not planning ahead to make sure you have the finances in place could mean your child’s education is disrupted at a vital stage.
Invest in their future
Investing is a potential way to help grow your money and cover education costs over the longer-term, particularly during periods of high inflation like we are currently facing.
There are a number of factors to bear in mind before deciding whether this could be the right decision for you. You’ll need to consider how much risk you’re prepared to take with your money to achieve the returns you are looking for.
If you’re a cautious investor, you might choose funds that are more stable with lower-risk investments.
Remember to review your existing investments and savings accounts regularly to decide if they will cover the increased education costs. You may need to invest more money or look for new investment opportunities to get the returns you are planning to offset them.
If you have money available for a lump sum and you invest it wisely, all or part of the education costs could be covered by the invested money and any return on it. Alternatively, you can start saving regularly and spread the cost. Or you might spread the risk by saving across multiple asset types or funds.
Please remember the value of investments and any income can go down as well as up. You may get back less than you invest.
Think outside the box
Your child may qualify for a bursary, grant or scholarship to help cover the costs of their education. You can get more information from your child’s school or the Local Education Authority for university fees.
Another top tip is to ensure you have a strong income protection policy. A lesser-known benefit of the cover is that, should you become unable to work through illness or injury, the policy might cover this cost so your children’s education remains uninterrupted.
For some parents, a flexible mortgage can help cover the costs of school and university fees. You can review your current mortgage arrangements and see what options are out there. Although bear in mind that interest rates are rising. It might be more beneficial to keep within your existing deal. Seeking financial advice here from an expert may be beneficial.
Trust planning can allow grandparents and other members of your family to make contributions to the education of your children. They can make a lump sum or regular gifts. This may also help reduce any inheritance tax liabilities they may have.
Bear in mind, the Financial Conduct Authority does not regulate Inheritance Tax Planning and Trusts.
Seek advice from specialists
If you need further support with reviewing your financial plans for education fees, you can book a no-obligation financial review with a specialist financial adviser at Wesleyan Financial Services. Visit www.wesleyan.co.uk/dental or call 0800 316 3784.
Please note: Your mortgage is secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
Tax treatment depends on the individual circumstances and may be subject to change in future.
Advice is provided by Wesleyan Financial Services Ltd.
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