Increasing the number of university places is only half the battle
David White, Chief Executive of The Children’s Mutual comments on the findings of Higher Education Funding Council for England (HEFCE):
“It is hugely encouraging that the number of students from low income areas and disadvantaged backgrounds has risen so significantly over the last five years. But while this gap is being slowly bridged another potential chasm continues to widen.
With figures suggesting that students leave higher education with an average debt of £23,500 it is vitally important that funding university doesn’t become a barrier to less well-off students attending in the first place.
While students from better-off families may have help in paying off their debts at the end of their course, leaving them free to pursue the next stage in their adult lives, a debt of £23,500 could prove debilitating for less well-off students who don’t have that safety net.
“The Child Trust Fund is playing an essential role in helping parents save for their children’s futures and friends and families who save £24 per month, the average amount amongst our customers, could have a fund worth £9,750 when they reach age 18 – this could make a real impact on reducing a student’s end of course debt.
“In fact, had the Child Trust Fund been launched 18 years ago, and families been able to save £66 a month into their child’s CTF for that period, the fund could now be worth just over £23,500 – helping to ensure that a student’s graduation is a milestone and not a millstone around their neck.” http://push.co.uk/Push-releases-figures-for-2009-student-debt-survey/
 This future projected value is based on investing £24 a month [plus the Government’s initial £250 voucher and another £250 at age 7] for 18 years in a stakeholder CTF account. We’re assuming an investment return of 7% a year, and charges of 1.5% of the CTF account value each year. The projected values aren’t guaranteed because the value of shares goes up and down. So the final payout could be more or less than this.
 The figure is based on a hypothetical calculation, tracking the real performance of shares as measured by the FTSE All Share total return index over 18 years, from 1 Jan 1992 to 31 Dec 2009. They assume £250 invested at the child’s birth and a further £250 at age seven and yearly charges of 1.5% of the account value (1.5% is the max charge allowed on a Stakeholder CTF). The figures also include lifestyling. It is important to remember that past performance is not a guide to future returns. Share prices can go down as well as up and the eventual lump sum could be more or less than shown. A child could get back less than paid in.