17 November 2016

Could investing fund your kids’ higher education?

State education might be free in Britain, but you’ll still need to plan ahead if you want to support your child if they continue their studies. Discover the common costs of higher education – and how investing could make your money go further.

When you’re sleep-deprived and faced with two screaming under fours, there’s a good chance that working out the best way to fund your child’s higher education will tumble down the priorities list.

But with interest rates at an all-time low on cash savings accounts, now might be the time to consider whether investing could help you to make your money go further.

What's the difference between saving and investing?

With savings, there is very low risk to your money - you’re simply putting money aside to use in the future – but the amount you can earn in interest is limited. A possible advantage to investing over saving is that there's the potential for capital growth (profit made on your investment) which may bring you more of a return for your money than saving alone over the long term. Bear in mind that investing does involve more risk than a cash savings account, but over time the returns can be higher.

As a rule of thumb, it’s best not to invest money that you may need in the immediate future. But if you can afford to lock it away for 6-10 years, investing could help you to cover future costs such as contributing to university living costs while your child completes their degree.

Find out how a Nationwide Financial Planning Manager could help you with your investment needs.

The value of your investment can go down as well as up so you may get back less than you originally invested.

The cost of higher education

We all want our kids to get the best education possible, but it can be stressful when unexpected costs start to mount up. Going to university can cost around £44,000 for three years but this varies according to location and lifestyle. 

We’ve summarised the costs you can expect to help you to plan where you might want to offer assistance in future.

  • Tuition fees – up to £9,000 per academic year, according to the National Union of Students (NUS)
  • Rent – from £2,880 to £6864 per year, depending on location
  • Travel costs – the NUS predicts these to be around £709 per academic year
  • Phone bill – £10-£50, according to the University of Edinburgh
  • Food – £140-£250 per month, according to the University of Edinburgh
  • Books and course materials -  could cost from £390 for a 39 week course according to the Imperial College London  
  • A share of household bills – internet, TV licence, water, gas, electric, contents insurance
  • Leisure activities - such as cinema and going out, or sports equipment.

Start planning today

With today’s young people facing a tough job market and student debts, you’re probably thinking about how you can help your child on the way to a better financial future.

If you decide you want to cover the cost of rent in private accommodation for three years, you could be looking at £8,640 to £20,592. In a regular savings account, that could take you more than 14 years of ferreting away £100 per month at 2% AER!1

But if you’re debt-free (aside from your mortgage) and still have money left over once you’ve covered living expenses and savings for emergencies, investing might be a good alternative.

In practice most people take a balanced approach. By making sure that you’ve paid off any debts and have enough set aside to cover unexpected costs you can then choose to take a more calculated risk with a portion that you know you won’t need to access for six or more years.

Important information

Investments through Nationwide are provided by Legal and General. 

As part of Nationwide’s financial planning service, your Financial Planning Manager will advise and make a recommendation for you after assessing your needs. Please note, we offer restricted advice on a limited range of carefully selected products available through Legal & General. You may ask us for a list of the companies and products we offer advice on.

Nationwide’s financial planning service is available to those who have (joint/single) £50,000 or more in savings and/or those who earn (joint/single) £50,000 or more per year.

1Calculation based on our current rate of 2.00% gross p.a./AER on our Regular Saver account.

The content displayed on our recent news and articles page is for information purposes only, and is accurate at the time of publication. The information will not be maintained, and so we cannot guarantee that at any given time the information will be up to date or complete. Please verify any information you take before relying on it.

Nationwide is not responsible for the content or availability of external websites. Nationwide does not make any recommendation or endorse any advertising, products, services or other content on such external websites. Views expressed on third party websites are those of the public and unless specifically stated, are not those of Nationwide.

Most popular

Alfred’s story


We're taking a look back at our first ever mortgage customer in 1884, Mr Alfred Idle.

You may also be interested in...

Our helpful guides

We've created a range of helpful guides to help you make better financial decisions regardless of your circumstances. Find out more about owning property, growing wealth and planning for life events.

Our products

Whether you are after a current account, a savings account or even looking for a mortgage, Nationwide has a range of great products that could help you, no matter the situation.