Making Cents: Getting a kid through college if you haven’t a nest egg

Consumer advice with Grainne McGuinness

If you are a parent of one of the students who received CAO offers yesterday, you and your son or daughter are heading into an exciting but expensive stage of life.

If a loan is needed to cover the costs of college you will have to decide whether you or your child will borrow the funds. AIB and Bank of Ireland both offer tailored loan options for students and parents.

If your son or daughter borrow the money themselves a parent can expect to be asked to act as guarantor for the loan and, should they get into difficulties, the guarantor will be held accountable for the debt. AIB’s student loan currently has an APR of 10.33%. Students can borrow up to €50,000, over one to five years and begin full capital and interest repayments immediately. Bank of Ireland offer a student loan of up to €10,000, at 9.7% APR for up to five years.

AIB have a second loan offering specifically for paying the annual student contribution charge, currently €3000 per annum. The student can borrow the €3000 each year for up to four years at 8.45% and while in college make interest-only repayments.

At the end of the course they will then begin repaying the capital. Interest-only payments are comparatively low, €20.95 per month in first year rising to €62.83 after three years.

So this is an option for students who can’t afford to make full repayments while studying, although they are then left with the balance to pay when they graduate. Bank of Ireland offer students an interest free loan of up to €1500, to be paid back within one year.

Borrowers can defer payments for three months, so it is ideal for students waiting on a grant payment to come through.

For parents, Bank of Ireland offer a loan similar to AIB’s one for students, purely to cover the student contribution charge. Borrowers borrow €3000 each year for up to four years, at a very competitive 7.5% APR.

Parents can choose to repay the loan in year one over 24 months, year two over 36 months, year three over 48 months and year four over 60 months. A new application is needed each year and borrowers can choose to repay over a shorter time period if they prefer.

AIB’s Parent Student Finance Loan can be used to cover the student contribution, but also additional expenses. Parents can borrow up to €25,000 at 8.45% APR. Borrowers make a single application and funds can be withdrawn as needed every year, or as a lump sum at the beginning of the course.

Parents can make interest-only repayments for the course duration, and then repay the balance over up to five years.

Credit unions are also an option for both parents and students and traditionally have been flexible when it comes to loans for education. Rates vary so check with your local branch.

Be grateful if your son or daughter has a place in a college within driving distance. The general housing crisis is having an impact on student accommodation and rents are rising.

Students looking for rooms in Dublin can expect to pay upwards of €500 per month and, even away from the capital, rents in Cork and Galway can easily top €300 pm.

If renting privately read the lease thoroughly before signing, get receipts for all deposits and rent payments and take pictures of all rooms before moving in. You can use these if their is any dispute with the landlord when leaving.

Traditional ‘digs’ accommodation can sound even more expensive - daft.ie currently have a room advertised in a family house in Dublin for €180 pw. But there is the benefit of bills and some meals included and, particularly for first years, some level of supervision.

The reality of managing utility bills, bin charges etc can be overwhelming for teenagers. The Union of Students in Ireland encourage people with spare bedrooms to rent to students, check out listings at homes.usi.ie.

College housing has the advantage of being purpose built and planned - it will be close to college and have amenities nearby. But it is also expensive and may be booked out at this stage. Rents for student halls are generally paid in two instalments rather than monthly or weekly, check college websites for details.

Deal of the Week

Internet access will be a basic requirement for all students so this week we looked at mobile broadband options. You can get Vodafone Pay as you Go monthly from €20, with no installation charges.

You will be given a stick modem (dongle). This package has a download speed of 7.2Mb/s and comes with a monthly data allowance of 7GB. Meteor and E Mobile have similar packages, so the deciding factor when it comes to mobile broadband is coverage. Check coverage levels in the rented accommodation before choosing.

Each provider has a map on their site showing their coverage and it is also worth asking your landlord. There are bill pay options for mobile broadband, but they are not significantly cheaper than the prepay so with only nine months in the college year it makes sense to stick to prepay.