Cost of offshore education soars
CALCULATION: THERE ARE SAVING RECOMMENDATIONS
Due to capital requirement, the longer you invest, the smaller the starting value.
If you want to send your child to the UK next year for tertiary education, you will need about R2.5 million. If you have a young child, you will need upwards of R9 million by the time they are ready to go and you will need to start saving about R17 000 a month now,
escalating by 10% per year on top of whatever you are saving to send your child to local private primary and high schools.
Increasingly, wealth managers are being asked about the costs of offshore education after matric by their high net worth clients due to a perceived decline in educational standards in South Africa.
We investigated the costs and they are staggering.
In South Africa, the average minimum cost of university tuition is about R35 000 per year.
These costs exclude additional expenses such as study materials, textbooks and cost of living, which varies according to destination and the course studied.
I investigated how much a client would need to save to send their four-year-old to study at the University of Edinburgh, UK, and established that they would need to begin saving about R16 769 per month, escalating by 10% per year to have sufficient capital to cover the four-year tuition and average cost of living in 14 years’ time.
It will take a huge commitment and full family buy-in with children at private schools for even wealthy clients to educate their children overseas. The sooner savings start, the better. Due to the large capital requirement, the longer you have to invest, the smaller the starting value.
Savings recommendations
Align your assets with your liabilities. As the liability in this case will be denominated in foreign currency, it makes sense to invest in foreign currency. This will protect the value of the investment should the rand depreciate;
Do your homework. Understand the budget required for your child to live comfortably and determine whether this is realistic; and
Many of the universities supply estimated tuition fees and cost of living for international students on their websites – this is good.
Investigate scholarships. Most offshore universities and colleges offer scholarships which can ease the financial pressure for exceptional students if they qualify.
These scholarships are difficult to get and the process of applying is somewhat tricky but there are organisations that can help such as Crimson Education.