Money: Readers' Lives - Parents prepare for the university of hard choices
University fees ... transferring money ... Eurotech liquidation. Your queries answered
Sunday 05 October 1997
The proposed changes may not in fact increase the money parents (as opposed to students) will need to find. That aside, saving for university costs is no different from saving for other things.
The Government has two proposals. One is to abolish the maintenance grant, the other to introduce tuition fees. Neither proposal would increase the amount of money parents are expected to contribute towards their children's higher education.
Under the new system, means-tested parental contributions for maintenance would go down, but the decrease would be matched by a new contribution to tuition fees. Parents with low incomes would not be expected to make any contribution to maintenance or the new tuition fee. The big difference is that low-cost (official) student loans will be dramatically increased. For example, a student in London from a low-income family could get a cheap loan of up to pounds 2,085 this academic year. Under the new system, that would rise to pounds 4,245.
So when working out how much you might need to pay, you have to decide whether you would expect to pay all the costs or just the amount for which you might be officially assessed. You can get an idea of the amounts involved for this year from a booklet published by the Department for Education and Employment called "Student grants and loans". You would have to multiply the amount by say three (for a three-year course) and by the number of academically inclined children you have. But there is no knowing what the actual figures might be, or how rules may have changed, by the time your own children get to university.
Your choice of savings vehicle will depend on your tax position and the extent to which you are prepared to take a risk. Timescale is also a factor. For example, if you start saving once your children go much above 10 or 11, it may be better to stick to low-risk deposit or fixed- return investments. Before those ages, higher-risk share-based investments may be more appropriate.
Look for the usual tax-efficient opportunities where you can: Tessas, National Savings certificates, PEPs and so on. Ideally, you should seek independent financial advice. But alarm bells should start ringing if you find yourself being directed towards high-commission endowment policy arrangements or, indeed, into any special plans described as being specifically to fund university costs. By and large, an investment is an investment is an investment.
I had a big instalment of tax to pay back in the summer, on Thursday 31 July. There seemed no point in taking the money out of my Co-op Bank account until necessary. I used the Co-op's telephone banking service to arrange to pay the money on Monday 28 July. But my statement shows that the money did not leave my account until Wednesday 30 July and was credited to the Revenue a day late on Friday 1 August. As a result, the Inland Revenue has charged me interest. Just how long does it take to transfer money? MA, London
You need four working days for your money to reach its destination. Unfortunately, the Co-op Bank messed this one up. First, what should have happened. You gave the instruction on Monday 28 July. The date on your statement for the money leaving your account should have been Tuesday 29 July. On Wednesday 30 July the money should have been in the clearing system. And on Thursday 31 July the money should have reached the Inland Revenue.
A possible complication: the Co-op Bank says that the money goes into a "collection" account - that is, an account for the organisation (in this case the Inland Revenue). It is then distributed to individual customer accounts, which takes an additional day. However, the Inland Revenue (and, it would seem, many organisations) actually credits your individual account on the day it receives the money.
The next complication worth bearing in mind is that while telephone banking allows you to contact your bank outside normal branch hours, there is a cut-off point when, for transaction purposes, the next day begins. The cut-off point at the Co-op Bank is not fixed. But let us say that you had phoned the bank after, say, 7.30pm on the Monday, 28 July. Then the date on your statement for the money leaving your account would have been Wednesday 30 July, not Tuesday 29 July. However, this did not apply in your case. You phoned in good time, at 5.11pm.
In fact, you were the victim of human error. The amount you were paying was above the limit for the particular member of staff you were dealing with. That person should have passed the payment to a supervisor for authorisation. But he delayed getting authorisation. As a result, your payment arrived late.
The Co-op Bank has agreed to pay the interest you have incurred and pounds 10 in compensation. In future, you can continue to allow four working days to make a payment. Note, that is four working days inclusive - that is, send on Monday for receipt on Thursday. Add on two extra days if a weekend intervenes, and further days for bank holidays. Make the payment early enough in the day to avoid the cut-off point. Keep a record of the date and exact time of day you contact your bank, in case of dispute - why not jot down details on the bill you are paying? And if the bank gets it wrong, insist on redress.
A company called Eurotech sold me a gas central heating service plan. I paid for one year in advance and then paid pounds 9.95 a month as advance payment for the next year of the contract. The firm has now gone into liquidation but another is taking over the business. Is it worth subscribing with the successor firm? J Palmer, West Sussex
The successor company has a similar name and employs many of the same staff. Eurotech went into liquidation on 27 June. People who paid money before that date count as unsecured creditors and are unlikely to get anything back.
The Derbyshire fraud squad has been involved.
A better alternative might be to consider the offer from Eurotech's liquidators, which is based on an insurance policy. It costs pounds 85 or pounds 90 and is underwritten by Domestic & General. Ring 0990 500 500 for details. In terms of customer numbers, the Domestic & General plan is second to the British Gas in gas central heating service contracts, although British Gas is by far the market leader.
q Write to Steve Lodge, Personal Finance Editor, Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL, and include a phone number. Alternatively, fax 0171-293 2096 or e-mail s.lodge@ independent.co.uk. Do not enclose SAEs or any documents you wish to be returned. We cannot give personal replies or guarantee to answer every letter. We accept no legal responsibility for any advice given.
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