Scramble for low-cost university places begins
A Level students face a desperate struggle to claim their university places this year, before next year's tuition fee hikes, with twice as many applicants as there are places.
The scramble for places is due to the introduction of £9,000 tuition fees in 2012.
Successful applicants for 2011 term starts will only have to pay £3,290 a year in tuition fees.
Thousands of students are expected to be disappointed this year with 673,000 students trying to secure one of 350,000 places. A third of UK universities have announced they will not be offering clearing this year because of the high level of demand.
Average predicted debt for students starting in 2012 is £53,400, according to the Push student debt survey 2011. In comparison students currently expect to graduate with debt of £20,000-30,000, according to an Association of Investment Companies (AIC) survey.
As a result, a fifth of students plan to go to lower-charging universities, according to the AIC.
The number of students taking a year out or deferring has also fallen - from 47,000 last year, to 30,000 this year – as young people decide against taking a gap year to avoid the rise in tuition fees, according to the Financial Skills Partnership.
Start saving early
Despite the concern over higher university costs, Standard Life research shows parent and student expectation for how much university will cost are lower than official estimates.
Over half of parents surveyed (58%) predict their children will leave university with £40,000 worth of debt, yet both student website Push and Standard Life say debt levels are likely to be around the £54,000 mark.
"The findings of our research are positive as they show that parents have identified the need to save for their children's time at university," says Julie Hutchison, head of technical insight at Standard Life.
"Unfortunately their expectations of what that cost could be and therefore the target amount they want to save might actually be too low."
Hutchison advises parents to start saving for their children's university fees from an early age to try and prepare for the growing student debt levels they will probably face.
"Even though a student loan can be taken to cover all these outgoings, parents can also seriously help reduce these costs."
Investing £50 a month into an average investment company will reward the saver with a total pot of £33,146 after 21 years, according to the AIC.
"The tax benefits combined with the efficiency of compound interest could help grow your savings considerably and could make a significant difference to them."
The practice of locating your financial affairs (banking, savings, investments) in a country other than the one you’re a citizen of, usually a low-tax jurisdiction. The appeal of offshore is it offers the potential for tax efficiency, the convenience of easy international access and a safe haven for your money. However, offshore is governed by complex, ever-changing rules (such as 2005’s European Union Savings Directive) and, as such, is the exclusive province of the wealthy and high-net-worth individuals.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
This is effectively paying interest on interest. Interest is calculated not only on the initial sum borrowed (principal) or saved (see APR and AER) but also on the accumulated interest. The more frequently interest is added to the principal, the faster the principal grows and the higher the compound interest will be. Compound interest differs from “simple interest” in that simple interest is calculated solely as a percentage of the principal sum.