Student debt is at an all-time high. Upon graduating, students are now faced with debts of over £40,000, which they will then spend much of their working lives paying off. The debt charity StepChange has reported an 85% increase in 18-24 year-olds seeking help.
Henry Cobbe and Alexandra Grant propose a new approach: encouraging prospective students to build assets to fund their fees and living costs. They suggest that, instead of pushing young people into debt, prospective students (and their parents) could be encouraged to finance their education with targeted Junior ISAs.
In a new report, Introducing Education Savings Plans, published on Monday 20 October by the Centre for Policy Studies, the authors show that this can be achieved with a new savings plan: the Education Savings Plan. This could:
Example of how Education Savings Plans could work:
As a suggested minimum, families contributing £2 per day or £60 per month from a child's birth could have at age 18 approximately £21,000 to fund further education. Families savings an average of £100 per month from a child's birth could have at age 18 approximately £40,000 to fund further education. Thereby replacing in part or in whole the need for additional student debt.