Share Prices & Company Research


17 August 2017

University challenge

A-level students across the country have collected their results this week, and for many of them, these results will provide the answer to one key question: have they achieved their chosen place at university?

Those preparing to take steps onto a degree course now have plenty to think about as they get ready to leave home and embark on a new chapter in their lives – not least of which is how to pay for it all.

With the results inevitably bringing the subject of higher education back on the news agenda this week, families and carers of younger children may be viewing this with some trepidation. Will they be able to support their children with their finances when they reach that stage?

Emmanuel Afoakwah, investment analyst at investment management and stockbroking firm Redmayne-Bentley, said: “Many will move on to higher education, which has become increasingly costly since the introduction of tuition fees in 1998. Almost 20 years later, many students now graduate with debts of over £50,000; parents are understandably keen to alleviate this financial burden if possible.”

Recent statistics demonstrate that it is never too early to prepare to meet the cost of a degree course. Interest rates on student loans will increase to 6.1 per cent from September - more than 3 per cent above inflation - with maximum student fees increasing from £9,000 to £9,250, typically leaving graduates with around £57,000 of debt. Tuition fees will need to be repaid when graduates earn more than £21,000 a year, with the debt written off if they fail to repay it within 30 years. This marks a significant financial burden for many, with the Institute for Financial Studies recently estimating that around three quarters of students will never repay this debt.

It is therefore worth getting into good habits at an early stage to ensure your children have the chance to gain the highest possible standard of education and meet their potential, with as few financial worries as possible.

Emmanuel said: “With this in mind, parents have several options regarding investing to meet these costs.

“Junior Individual Savings Accounts (JISAs) are long term, tax-efficient savings accounts for children. JISAs are available for children who are under 18 and, with some exceptions, resident in the UK. As of the 2017/18 tax year there is a subscription limit of £4,128. Currently, the child can take control of the account when they are 16, but cannot withdraw the money until they turn 18. Eligible children can hold either or both of the two options available: cash ISAs and stocks and shares ISAs. Stocks and shares ISAs present the opportunity for higher returns but come with the risk of losses and added costs for investing. 

“Earlier in the investment lifecycle, when the expense is still some years away, it would be advisable to prioritise capital growth. However, as the time of the expense approaches it may be wise to secure the capital by moving to lower-risk, income-generating investments such as fixed interest, infrastructure or property. For example, if the current JISA maximum annual subscription of £4,128 was to be invested each year for 18 years, assuming a 6 per cent annual growth rate, this would grow to over £120,000, more than enough to cover the cost of higher education.”

Case study

Young JISA pioneers develop good saving habits

Sameh Hussain is a pioneer in the field of savings and investments for children. The youngster was the first child to have a Child Trust Fund (CTF) opened for him at Redmayne-Bentley. Sameh and his younger sister Amelia both now hold JISA accounts with the firm.

His father, insurance broker Tanveer Hussain, explained: “A JISA was something I wanted my children to have for the future, a fund that guaranteed money would be available in their own account when they turned 18.

“My father saved money for us and I wanted to carry that forward. I hope this money will be put to good use and this will help my children to continue with their savings after they have turned 18, passing it on to the next generation.”

He continued: “Redmayne-Bentley provides a really good service. I get annual valuations, and I can find out what stage the JISA is at. It is a very easy service to use and I have had no hassle. A personalised service, where you get to speak to a person rather than simply dealing online, is more valued than people realise. This is what Redmayne-Bentley can offer, taking the time to sit with a client and speak to them, enabling them to speak to a person face-to-face.”

Please remember that investments and income arising from them can fall as well as rise in value and you may lose some or all the amount you have invested.


Tax treatment depends on the specific circumstances of each individual and may be subject to change in the future.


Notes to editor

Established in 1875, Redmayne-Bentley is one the UK’s largest independently owned investment management and private client stockbroking firms, with 37 regional offices throughout the UK and in the Republic of Ireland.

Redmayne-Bentley has experienced commentators available for comment on personal finance and stock market issues


University challenge
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