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Investing in our children’s education today will make all the difference for their future. It is a demanding world and we want out children to be capable of competing well. We also want our children to experience the highest quality of education for their own personal enrichment. Every parent wants the best for their child, but being able to pay for it is not always easy.

In the UK, most universities were effectively free from 1962 – 1990’s. Over time the cost of university has been steadily going up, with universities like Oxford and Cambridge charging £9,250 for Home/EU status students up to £29,217 for overseas students per year for tuition. In the USA, tuition can rise as high as $50,000 – $60,000 per year for tuition for private universities.

Below is a graph depicting the change in tuition for private university, public university, and two-year college in the USA over time.


If you add in the cost of everything else (food, books, housing, etc.) the cost expands even more


University costs are going up, and often times at a rate higher than the average rate of inflation (5% per year vs. 2-3% per year).
 
What are the other costs you should consider, in addition to tuition, when planning the cost of university?
  • Rent – Will your child will have roommates or live by themselves, which can make a large difference in cost?
  • Food – Universities usually have a meal plan for students, but how often is your student eating out at restaurants?
  • Text Books and Supplies – If your student is in the arts or sciences there may be extra lab fees or art supply fees.
  • Travel – how much will it cost for your child to travel and see you, particularly if you live in a difference country than where your child will study?
  • Internship Fees – Often times an internship will not pay a salary and your student will need to factor in the expense of living and working on their own.
  • Social Clubs and Activities – If you student studies in the US, they may be part of a Greek fraternity or sorority.
  • Study Abroad – If you child studies away, how much will this cost?
 
The Cost of University in the Future
 
You cannot control the cost of university in the future, but you can create a plan and choose how you will save today.
 
Tom and Rachel (fictitious couple) have a few children and want to send them to a top university in the UK or the US. Their oldest, Sarah, is 6 years old and they want to start saving today. How much will it cost to send their oldest child to university when she turns 18?

The above table gives 4 different types of universities and their forecasted cost in 2029 (when Sarah would be 18). In this situation, Tom and Rachel already have $25,000 saved and are considering the cost of sending Sarah to different types of universities. What if Tom and Rachel cannot afford to save the amount indicated (i.e. $643 a month to send Sarah to City University in Hong Kong)?
 
Making University Affordable
 
There are several options to bring down the cost of university:
  1. Apply for scholarships. Many students do not take the time and effort to apply for scholarships and thus forgo the potential for large financial aid.
  2. In state / Home residency status. In many countries, there is a significant reduction in tuition if you are a resident. Make sure you know what is required to be considered a resident in the country your child will study, as it can save you thousands of dollars.
  3. Financial Aid. Many universities and governments will provide financial assistance, particularly based on need.
  4. Government Funding Through Military Service. In the USA, if you enlist in the military they will pay for a large amount, if not the entire amount, of your university tuition.
  5. Take Out a Loan. This is never an ideal option, but can be a viable one if it is the difference between attending university and foregoing an education. Young students often times do not fully understand the concept of debt, so as a parent it will be important to educate them.
  6. Start at a Lower Cost University and Transfer Later. Sometimes a student is able to study for the first few years at a low-cost university (in the US they are called community colleges) and then transfer the last one to two years to a higher ranked university. This is not always feasible but can be a prudent option.
For Those Paying for Private School
 
If you are living outside your home country, you may be required to pay for the private school fees for your children. In this case, you already know the challenges involved with paying for your child’s education. Even though private school fees are most likely less than future university fees, it still requires a large cash outlay and cost to the family.
 
A few ideas to make school fees more affordable:
  • Save up for future school fees. It can be daunting to try to save in advance the cash needed for each school year’s fees, but borrowing or putting the cost on a credit card will add up over time as interest payments take their toll.
  • Consider a Less Expensive School. Many of the most expensive schools are located in prime real estate and have expensive sports facilities. You may find that a school with older facilities, but still with great teachers, may be a better financial option for your family.
  • Find Areas You Can Trim. Are there areas in your life that you can cut back a little? Maybe you do not need to buy a new luxury car, or maybe it would be good to move to a lower cost home?
 
The cost of educating our children is rising, and rising fast. The days of the low-cost university are long gone, and it is important as parents we plan ahead well. Planning for the future is crucial so that your child can have the best start in life and be well equipped to thrive in today’s competitive world.

This article was originally publish in Education Emirates.

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