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University Savings Plan: everything you need to know

Section: Family Savings
What is a University Savings Plan?

What is a University Savings Plan?

The University Savings plan is a plan designed to help you save for your child’s higher education on a monthly basis, tax efficiently. The plan has been tailored to help you save enough money to cover the costs of university tuition fees and living expenses for your child. It also offers a unique withdrawal process that comes into place when your child is aged between 18 and 21 years old, which allows them to take the money over the course of three years to spread across their time at university, as well as the opportunity to receive annual bonuses on your invested money to boost the value of their savings.

With the maximum annual tuition fee rising to £9,000 in 2012, students now face a more financially daunting prospect when they go to university. The University Savings Plan lets you save between £100 and £200 monthly, tax efficiently with the aim of covering the cost of tuition fees as well as other essential expenses.

If you open a plan for a child and they then decide not to pursue higher education, they will of course still receive the full tax-free lump sum when they reach age 18, or after 10 years, whichever is later. This can then be used as they wish for a housing deposit, a first car or help them with the first step of their career.

A little something for you

As a ‘thank you’, once you have opened a University Savings Plan online with Shepherds Friendly you will be entitled to a Love2Shop voucher code of up to £30! This code can be used online at a wide variety of retailers including Amazon, Marks & Spencer, Debenhams, John Lewis, iTunes, Topshop and more.
Click here to find out more and apply online.

Why should I choose a University Savings Plan?

As well as being a tax efficient, specifically designed plan, the University Savings Plan has many more great benefits:

  • The plan will help your child deal with the escalating costs of higher education
  • You can decide how much you want to save each month. You can invest regular sums of £100, £125, £150, £175 or £200 each month, up to a maximum annual investment of £2400
  • The plan lets you decide whether your child receives the full lump sum when they are 18 or at the end of their university course. You also have the option of making withdrawals in stages during their course (between the ages of 18 and 21) to help with their ongoing annual costs
  • If your child is ill for a period longer than four weeks and is unable to attend school or college, parents can receive tax-free benefits of up to £200 a week towards any extra costs incurred
  • The plan can be opened by any family member of a child, not just their parent or guardian

Simple, straightforward investing

Unlike many other investment accounts you may come across, you don’t need to make any decisions about which funds or investments to choose with the University Savings Plan. Instead, Shepherds Friendly invests on your behalf in their With-Profits Fund, and returns on the plan will depend on the performance of the fund throughout the investment period.

What does tax efficient mean?

Tax efficient savings plans are free of both income and capital gains tax, which means even more money for your child at the end of the plan. They are a long-term investment, which means there is a bigger potential for investment growth through the payment of annual bonuses.

As Shepherds Friendly is a mutual organisation, you can save with confidence knowing that they work for their members and don’t have any shareholders to appease. Their special tax status that is only available to friendly societies offers you distinct savings advantages too. You can open a University Savings Plan for each of your children, with the growth of the savings fund and the final lump sum payout being completely tax-efficient.

Click here to find out more about other children’s savings products available from Shepherds Friendly

Mother & Baby is a trading style of Bauer Consumer Media Ltd. Bauer Consumer Media Ltd is an Introducer Appointed Representative of The Shepherds Friendly Society Limited.

Shepherds Friendly is a trading name of The Shepherds Friendly Society Limited which is an incorporated Friendly Society under the 1992 Friendly Societies Act No. 240F. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

All references to taxation are to UK taxation and are based on Shepherds Friendly Society's understanding of current legislation and H M Revenue and Customs practice which may change in the future. For our With Profits plans investment growth is by means of bonuses, the amount of which cannot be guaranteed throughout the term of the contract.



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