Monday, 17 August 2015

STARK FINANCIAL REALITIES AHEAD OF THE ACADEMIC YEAR



STARK FINANCIAL REALITIES AHEAD OF THE ACADEMIC YEAR

After a lot of hard work and a very nervous wait, 58,000 leaving certificate students around the country received their results this week. Students and their parents have invested a lot of time effort and energy to try and get the results they want, but that is not the end of the story by any means. Having done all of the hard work to earn their places, students need to find the funding to actually get them there.  It is just like buying your first car, you have it outside the door and you are dying to take it for a drive, but actually putting it on the road is a costly business.

In order to help us understand the difficulties that students were facing here at the Irish League of Credit Unions we commissioned some unique independent research to look at the cost associated with going to college.  We asked parents just how much it costs to send their children to college in Ireland. The results of this survey highlight the financial impact that college has on family spending and budgets as well as the challenges and concerns parents have in relation to finance, grants, living away from home and job prospects. The students were asked about working throughout the term, job prospects in Ireland, course choice and emigration.  The results are very similar to the stories that we hear across our counters in credit unions every year, which is why we place so much emphasis on ensuring that we provide very competitive loan rates and advice for families who are dealing with this particular expense.

Those parents who already have children in 3rd level education know only too well the financial challenges to be faced in the coming weeks, months and years. However, these students have spent the last couple of years focusing their attention on getting through the leaving cert, and have given little thought as to how they will fund life after secondary school. Luckily for them 94% of Irish parents are on hand to support their children with college related costs by contributing an average of €453 per month per child. 64% of parents said that family budgets have been adversely affected by the increased registration fees and 41% of parents find covering the costs of accommodation particularly stressful.

In terms of how parents cover the costs – not surprisingly the results show that monthly income and savings are the most popular way in which parents fund their child’s third level education, credit union loans are the next most popular method, followed by a bank loan. A huge 59% of parents expect to get into debt in order to finance the cost of third level education for their children. €5,030 is the average debt per child, per annum that parents will incur. Worryingly 10% of those considering borrowing have said that they consider a moneylender a viable option.

As for the students, in the aftermath of the celebrations comes the reality that they will soon leave the comfort of their family homes and go off in to the big bad world in search of student accommodation. Our research found that students living away from home are spending on average €1,033 per month on rent, transport, living and college related expenses. Students are paying an average of €380 in rent per month. As they will soon discover money does not grow on trees, and many of these young adults will find themselves in search of part time employment for the first time. The results show that 69% of students will work to fund or part fund college. Students are working an average of 26 hours per week, getting paid an average of €11.50 an hour.

  
The findings, particularly the financial realities facing parents and students, are stark. It is clear that students and their parents are experiencing very significant pressure in trying to fund third level education. The increased registration fees combined with monthly rent and bills, books and materials and day to day expenses are a significant financial burden to many families.

As always we would urge people to avoid moneylenders and talk to their local credit union first. Credit unions are available to support both parents and students as they prepare for the academic year. Some financial institutions try to attract students by offering short term gimmicks to open an account or offer an interest free period on a loan before a higher rate kicks in. This is not how credit unions operate. Credit unions offer loans at fair rates with flexibility to meet members’ needs. Each credit union sets its own interest rates and has its own loan criteria.  Your local credit union can give you details of their current interest rates.

We encourage anyone who is looking to finance their 3rd level education or who simply wants some advice on planning ahead or budgeting to call into their local credit union and speak to a member of staff.