SECTION 8
We teach our children to talk, walk, run, play and everything we can... We encourage them to dream, aspire, pursue and achieve…
As they grow, they dream about many things and quality higher education of their choice is one of their cherished dreams.
They expect adequate financial support from us to be able to pursue their dream.
The question is that as parents are we financially prepared to support our child’s dream?
In a recent report by HSBC called “Value of Education” the following were the highlights pertaining to UAE;
92% of parents see an undergraduate degree or higher qualification as essential to their child achieving important goals in their life, and 80% think a postgraduate degree (master’s or higher) is necessary.
89% of parents have a specific occupation in mind for their child, with medicine (33%), engineering (16%) and computer science (11%) the most popular.
81% of parents would consider sending their child to study at university abroad and, of these, 74% would be willing to pay more than it would cost to educate their child in the UAE.
For parents who would not consider sending their child to study at university abroad, the main barriers are that they do not want their child to be so far away from home (29%), they think the UAE offers a superior university education (27%) or that they would like to but cannot afford it (25%).
Nearly three in 10 (29%) parents of pre-primary school children who are expecting their children to go to university think they will have to take out a loan, while a similar proportion (31%) of parents whose children are currently at university have taken out a loan or expect to have to do so.
Parents who expect to borrow, or are currently borrowing, to pay for university costs recognize the implications, expecting to spend on average 4.4 years repaying the debt after their children have finished their education.
This borrowing consists primarily of specific student loans (23%); however, other general borrowing, such as personal loans or credit cards, also plays a role (13%).
Parents expect their children to be repaying their own university debt on average for 3.6 years after they finish their university education.
Why Saving for Children’s Education is important?
The report also highlights that Parents in UAE do recognize the need to save for their child’s university education – but many do not put this into action.
Nearly two thirds (66%) of parents of pre-primary school children think they will fund their children’s future university costs through savings, and only around one in 10 (11%) think they will rely entirely on day-to-day income.
However, among parents whose children are currently at university, only two in five (40%) are using or plan to use saved funds, and over a third (34%) are reliant or expect to rely entirely on day-to-day income.
This clearly shows that more parents are not focussing on savings for children’s education despite the pact they believe that University education will provide better opportunities for their children.
The following 5 steps which can help parents to save for their children’s higher education;
Plan for your child’s aspirations: Spend time, research and plan for your child’s education costs. Understand the effect of inflation and currency exchange if you want to send your child abroad for education.
The following are some of the articles highlighting the impact of depreciating rupee on parents and children in India aspiring to study abroad;
http://www.thehindu.com/news/cities/Hyderabad/plummeting-rupee-worries-stude nts-keen-to-study-abroad/article3449747.ece
http://www.bbc.com/news/world-asia-india-23894651
http://www.ndtv.com/chennai-news/rupee-at-2-year-low-indian-students-abroad-hit-hard-1209780
Start early: The best time to start an education savings plan for the child is when he or she is born, and the next best time is now, do not wait for a good day, right opportunity, increment or bonus to start your saving for your child’s education.
Start today; start however small you can start but start now.
Be Consistent: It is very important to save regularly to be able to reach your goal.
Invest your savings: Investing your savings in a good offshore and well diversified investment plan will help you beat inflation; making your money work for you instead you having to work for money.
Seek professional Advice: According to the HSBC report “Around seven in 10 parents who sought advice about their children’s university education say that they learned about possibilities and options they had not considered (72%) or became aware of barriers and complications they had overlooked (65%).
Although it might be tempting to do it on your own, it is advisable to hire a professional, who can help you choose the right plan to avoid losses or wrong university choices.