Part One: Funding your child’s university years

Going to university can cost more than £7,000 a year when you take into account tuition fees, accommodation, food, transport and socialising. IFAonline asks top advisers what parents can do to save enough money to fund their child's further education.

Simon Webster is managing director at Facts & Figures Chartered Financial Planners          

When considering university education you should ask yourself three questions.

1. What will it cost to send a child to university for a year?

• Tuition fees £3,290
  
• Accommodation varies by location but say £6,000
  
• Then there is the cost of books and incidentals say £1,000
  
• Food £1,500
  
• Call it £12,000 a year for 3 years.

2. Can I afford it?

3. Before committing a great deal of hard earned cash, make sure your child is both suited and prepared to do the work to justify the investment.

In theory a university educated student should command a higher salary in the job market, but in reality a 2/2 in an arts-based subject does not generally impress employers.

In terms of funding the trick is to start early; the longer you have to save the less you need to put aside each month. As to where you put it, for terms of over five years I would recommend stocks and shares ISAs; put the money on a wrap platform and spread it between a number of fund managers and markets. Seek independent financial advice for the selection.

If you have a lump sum then ISAs for each partner first and perhaps a unit trust portfolio with the rest.

Some will favour child trust funds but I am not a fan of giving children control of material sums at a young age. If they have control of the money they may prefer the beach in Bali to a three year slog at uni. If the money is in a CTF the child has the choice; if it is somewhere else; the parent has control. You may agree to fund Bali but at least you get a choice.

If ISA allowances have been used up a series of maximum investment plans maturing in sequential years required might be an option for a higher rate taxpayer. Avoid friendly societies they are too expensive even with their bit of tax relief.

If you have left it too late and you have some equity in your house a further advance may help. Flexible mortgages with a drawdown facility can be helpful.

Last but by no means least student loans are an attractive way of funding late planners cheaply. Take the student loan and the parents can help pay it off later if they want to.

See tomorrow's IFAonline for views from Peter McGahan, Worldwide Financial Planning