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Half of Irish Parents Completely Unprepared for High Cost of Putting Children through Third Level Education
Seven out of ten think student loans are a great idea or an idea worth exploring
Over a third of families intending to put children through third level education have savings earmarked for this purpose, according to new research from Aviva
Just under half of parents (49%) say they have made no financial preparations to meet the cost of putting their children through third level education. That’s according to Aviva’s Cost of Education Report, which shows that, on average, parents expect to pay out €5,122 a year to send a child to a third level college or university. If the student has to move away from home to go to college, the expected cost is almost double, at €10,125.
The research for the Report, carried out for Aviva by RED C, found considerable openness and some support for the idea of a student loan system with repayment to be contingent on the income earned by graduates. This is one of the options for funding third level education contained in the Cassells Report, Investing in National Ambition –A Strategy for Funding Higher Education.
Three out of four parents intending to send their children to college or university thought a student loan system was at least worth exploring as a funding option. A quarter thought it was a great idea while 2% said it was the only way their children could afford to go to college or university. Overall, just over a fifth of parents were opposed to the idea. Opposition was higher among students, at 35% but a clear majority (59%) felt it was an option at least worth exploring. One in four students thought it was a great idea.
Commenting on the Report, Ann O’Keeffe, Head of Individual Life and Pensions at Aviva said: “Parents want to give their children the best possible chance in life and in Ireland that has always meant giving them the best education you can afford. In that context, it’s not surprising that parents want to explore all options for funding Higher education, including the option of a student loan system. But whatever the outcome of that debate, education will continue to be a big item in the family budget.”
The survey found that over a quarter of Irish parents (27%) are currently saving for their children’s education. Most families have made some provision for the cost of primary and secondary school. But funding third level education continues to be a financially daunting prospect for the majority of parents, although there are signs that families may be getting to grips with this major financial challenge. Last October, Aviva’s Family Finances research found that 41% had made some preparations of the cost of higher education. This latest survey, completed in May, shows that number has improved by 10 points to 51%.
“It’s good to see that the burden of higher education costs seems to be easing somewhat for parents in the wake of a prolonged crisis that our research has shown, was especially hard for many families. But, as our latest survey found, 49% of parents still feel unprepared to meet the cost of third level education. Putting even a small amount of money into a dedicated education savings plan each month is a great way of investing in your children’s future,” said Ann O’Keeffe.
Overall, 41% are either currently paying or intending to pay for their children to go to college or university and the majority said they expected to meet the cost from a combination of regular savings, salary or other income. One in two expects to get a third level grant for their children while 18% said they would rely on help from grandparents or other family members.
Over a third (35%) has a savings account specifically earmarked to cover the cost of third level education. “Our most recent Family Finances Report showed that the recovery in the economy was making savers less risk averse about investing. With bank deposit rates at historic lows, parents may be ready to move their education savings into investment products which offer the potential for a higher return over the medium to long-term,” concluded Ms O’Keeffe.
To find out more about Aviva’s Regular Saver, visit here.
Cost of Education Report (4,397Kb)
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The change may partly be due to the timing or the survey but it also reflects growing consumer confidence in the interim period. Aviva Family Finances Report 2017, published in late June, found that 64% felt in control of their personal finances, up 11 points since October 2016.