How To Start Saving For University

Opening a savings account while your child is still young to help pay towards their future university education could help them to avoid years of debt in the future. 

One way that parents can help their children through their university education is by opening a savings account while they’re still young. There are no savings account specifically for this, but there are plenty you can use for this purpose, whether you’re saving for fees or the cost of student accommodation

If you have a lump sum to invest, a long-term fixed-rate bond is a good option as these accounts usually offer the best rates. If you need to be able to make transfers, look into a fixed rate ISA. Make sure to check that transfers are allowed. Fixed-rate accounts usually don’t allow further additions once the account has been opened, which means they aren’t a good choice if you want to regularly add funds to the account. 

A Regular Savings Account

A regular savings account normally means you will have to deposit a minimum amount into the account every month. The minimum amount required will depend on the terms of the individual account, so check the terms first. This option works best if you want to add to the savings on a regular basis and build up the money over time. 

Short-Term Fixed-Rate Bonds

Once a regular savings account has matured then you could move the money into a short-term fixed-rate bond, which could give you a higher interest rate than an easy access saving account and regular savings accounts. Parents could decide to save for their child’s university using a short-term fixed-rate bond to benefit from the higher rates, while also being able to keep on saving for the future in a regular savings account too.

Children’s Savings Accounts

As an alternative option, you could decide to open a children’s savings account or a Junior ISA on behalf of your child. The rates on children’s savings accounts are usually very competitive, so this can be a very good option. Look for accounts that allow you to keep paying in money, but that doesn’t allow the money to be accessed until your child reaches a certain age, usually 18 years old. This makes them perfect for university savings as the savings can’t be dipped into until they get to university. Another benefit of choosing to use a JISA is that £4368 can be deposited into the account every year. However, you can’t add more than this limit in the same tax year. However, the JISA limit is separate from the limit on an adult ISA, so you can add money there too, as well as adding money into the JISA on behalf of your child. 

It’s never too early to start saving money for your child’s future education. These savings can be spent on university or other educational courses or saved for help with a housing deposit if they decide university is not for them after all.

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