The rising cost of education
It’s important to start saving as soon as possible to put your child through school and university
Arecent study by Sanlam, focusing on mothers with children aged between three and 15, shows that some parents will even attempt to hold down two jobs to keep their children enrolled in a private school, which they perceive to be the best legacy they can give their children.
Karin Muller, the head of Growth Market Solutions at Sanlam, says: “Our study shows that having the best possible education is the biggest dream that most mothers have for their children, regardless of their age or income.
“At the same time, one in four parents are not saving anything towards their child’s education, which means that these dreams may not be realised in future because the costs keep rising.”
Muller says that for those parents who are saving, the survey found that most mothers say they invest between R200 and R500 a month for each of these needs: future schooling, extramural activities and/or their child’s nest egg.
The survey also found that older mothers generally invest more in their children’s education than younger mothers. This is possibly because older mothers have a higher income.
While the majority of mothers are optimistic about their children’s financial future, the middle-income group is less confident than the emerging and upperincome groups, which highlights the financial pressure felt by the middle class, which receives no financial subsidies from government, but which is affected by rising living costs and increasing taxes.
While education is a priority for parents, figures released by Old Mutual illustrate the financial commitment that is needed to educate our children as education costs continue to rise well above the level of inflation.
According to Jean Minnaar, investment and savings manager at Old Mutual Emerging Markets, in 2016, one year’s education could Expected cost of a year’s education R29 000 R71 000 R114 000 R50 000 R45 000 R109 000 R176 000 R77 000 R90 000 R217 000 R351 000 R154 000 R139 000 R334 000 R540 000 R237 000 cost between R29 000 and R114 000, depending on the level (primary school, high school, university) and type (private, public) of education.
By 2021, it is forecast that parents will be spending between R45 000 and R176 000 for one year’s education ( see table).
If your child is starting Grade R this year, the combined cost of education is expected to be R1 057 000 for public schools and R2 406 000 for private.
This includes primary school, high school and a three-year university qualification.
For example, if your child is born in 2016, looking at the figures in the table and assuming a 10% investment growth before fees, you need to save about R530 a month for university tuition (excluding accommodation, books and travelling costs).
However, if your child is already 10 years old, you will need to be saving R1 050 a month. This highlights the benefit of starting early.
Remember, these monthly savings will also need to be increased by 9% a year to keep up with inflation related to higher education.