In December 2011 MPs permitted Universities to raise undergraduate fees from £3,350 to £6,000, and
up to £9,000 in "exceptional circumstances" such as Oxford and Cambridge. Financing a child's higher
education pathway has therefore potentially become significantly more difficult for a large percentage
of those entering University this year and beyond.
This report investigates ways in which the burden of financing a child's University costs can be alleviated
via sound financial planning and a solid investment strategy.
Junior Individual Savings Accounts (JISAs) were introduced in November 2011 as a means to establish an
investment portfolio for young children in order to give them as secure a financial start in life as
Junior ISAs can hold cash like normal savings accounts, or they can take the form of Stocks & Shares
investments, but all benefit from having a yearly tax-free allowance.
Depending on the type of ISA chosen, they can either provide instant access funds or a longer term
investment fund helping to offer and secure a child's financial future, whilst promoting the concept of
structured saving to the next generation of investors.
It is calculated that three years of University schooling plus living expenses will run up to about £50,000
in the current environment. This cost is projected to increase steadily throughout the coming decade.
As a result, investment trusts can be one of the most effective ways of accumulating funds in time for a
child's higher education.
Investment trusts consist of diversified portfolios that are professionally managed. Because the portfolio
contents are pre-selected by experts, opening an investment trust can be one of the simplest methods
of establishing a successful long-term investment strategy.
Trusts exist with a variety of risk levels which allow investors to select on the basis of financial risk
exposure versus return potential.
The level of risk accepted by an investor should depend upon factors such as the value of the initial
investment, the length of time available before the child begins University and the investment growth
As independent journalist Malcolm Anderson states for example;
A trust might hold 30% of assets as cash, 30% as reliable bonds and 40% in diverse equities guaranteeing
a stable return that is not overly subject to the volatility of the stock market.
However, a portfolio of up to 80% diverse equities may make better financial sense as the opportunity
to earn greater dividends is increased but if the stock market takes a downturn the investor will still
have cash on hand to recoup losses.
If the investment trust can be structured for the long-term - 10 years+ - even greater financial risks can
potentially be taken which will yield the greatest returns in stable or positive conditions. Successful
investments can be exploited for longer and there is also time to regain losses should stock markets
suffer a fall. The fact that the natural short-term volatility of stock markets is balanced out over time
means that investment trusts can be considered to be solid options for long-term financial growth.
Grant &Scholarship Applications
Children from a range of backgrounds are entitled to having some, or even all, of their University
expenses covered with a grant or scholarship if in need of financial assistance. For example,
government-funded maintenance grants are available for full-time students from families earning less
than £42,600 as their annual income. Grants and scholarships are also available from the Government,
the Universities themselves, and even private parties for students who have specific career aspirations
or extra-curricular interests, as well as those from certain family backgrounds with academic, artistic or
Flexible Payment Options
University fees have traditionally been paid per term. However, due to the aforementioned increase in
University costs, many higher education institutions now offer monthly payment plans through third
parties in order to reduce the financial burden. Banks facilitating these plans can charge a certain small
percentage for providing the service but other private loan options are available and so, with
professional advice, a sound plan can be implemented.