Parents with children hoping to attend university have been advised to start saving from the time they are born.

With over 61,000 students having just received their Leaving Cert results, financial services firm Gallagher is warning the cost of attending third-level education can be substantial.

The company advises parents to start saving early, pointing out that long-term investments benefit from compound interest, where the returns on your investment generate their own returns over time, significantly increasing the value of the savings.

And Gallagher suggests a life assurance saving plan is one option you could consider when saving up for college costs.

Or another option is a regular savings account, but the firm warns the deposit interest earned on such an account could be much lower than the investment return you could make on a good life assurance savings plan.

Gallagher also notes that if you were to save the child benefit of €140 a month from a child’s birth to the age of 18 into a life assurance savings plan, it would equate to a total fund after all charges and tax of €41,366.30, assuming an annual investment growth rate of 5.5%.

By comparison, if you were to save the monthly child benefit into a deposit account with no interest between birth and the age of 18, this would equate to a total fund of €30,240.

The financial experts also warned not to take big risks with your savings. If you only have a short time horizon (less than five years) to save up for a child’s college education, a regular savings plan with better-than-average interest rate may be more suitable as with a short time frame, you would have less scope to take on investment risk.

Savers will lose one-third (33%) of any interest you earn on savings to Deposit Interest Retention Tax (DIRT). The interest you earn on a regular savings account may also not be enough to surpass inflation, meaning inflation will eat into the value of your savings over time.

Jonathan Roche-Kelly, director of financial services for Gallagher in Ireland, explained: “Sending a child to college in Ireland can now cost as much as €74,780 over the course of a four-year undergraduate degree – if they’re living away from home, according to the latest TU Dublin Cost of Living Guide.

“This guide, which is for the upcoming academic year, estimates that annual expenses can range from €11,378 to €18,695 for a student living away from home, which adds up to between €45,512 and €74,780 for a typical four-year degree.

“Even those living at home incur around €6,977 per year in transport, books, and other living costs. “For new parents, or parents of children in primary school, by the time their children start college, the college bill will likely be much higher than this due to inflation.”