Affording University: What Are the Options?

Helping young adults to choose the right school for tertiary education isn’t the only worry facing parents today. The rising cost of education is putting some families in a bind. Is there a “best way” to save for your children’s future?

Managed funds are great if you have more than 10 years to save. These investment schemes help to maximise growth potential, but it can be difficult to choose a high-performing fund. You also have to be prepared to weather the ups and downs of an ever-changing market.

If you’re short on time, or worry that the fluctuation of the market could impact your savings, you may opt to utilise bank products. About $50 a week into a product such as NZCU Baywide’s Online Saver can give you more than $13,000 in five years. The programme currently requires a $1,000 minimum initial deposit and offers a 4% interest rate.

ASG’s Education Fund seems like an easy way for parents to save. Scheduled contributions of about $10 a week minimum, depending on the age of the child, may feel more manageable to a family on a budget. However, the Education Fund has strict criteria to pay out interest. If your child doesn’t pursue a full-time, three-year tertiary education, or doesn’t complete a term successfully, you can only get back your contribution, minus ASG’s administration and management fees.

Another possibility is to take advantage of interest-free student loans. If you focus on paying off a mortgage with a higher interest rate, you can increase your equity while postponing the output of university costs. On the other hand, new graduates often struggle to plan for the future with 12% deducted from their wages for repayment. It can also be risky to count on student loans to remain interest free in the future.

With all the options out there, Pinnacle Gold can help you sort through any confusion. In truth, there is no “right way” to create an education fund. You just have to find the right way for you.

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