Planning for the Cost of Higher Education

Planning for the cost of higher education

‘I prefer peace. But if trouble must come, let it come in my time, so that my children can live in peace.’
(Thomas Paine)

We all want the best for our children and for them to have the best possible life. And education is one of the surest ways to ensure their success in the future.

Whether your children would like to pursue careers in medicine, law, the arts or finance, one thing is certain, a good quality education is essential and unfortunately, rather expensive.

Let us have look at annual tuition fees if your child had enrolled for a university in year 2015-2016:

Massachusetts Institute of Technology, United States
Undergraduate – All Programs: US$46,704
Postgraduate – Most Post Graduate Programs: US$38,660

University of Cambridge, United Kingdom
Undergraduate – Science & Technology Program: US$25,888 – US$35,310
Undergraduate – History & Management Program: US$23,198 – US$35,310

Postgraduate – Science & Technology Program: US$35,674 – US$41,544
Postgraduate – History & Politics Program: US$30,136 – US$35,215

National University of Singapore (NUS), Singapore
Undergraduate – Science/Medicine Program: S$29,050 – S$135,650
Postgraduate – Arts/Science/Medicine Program: S$17,200 – S$81,150

Source: QS World University Rankings 2015-2016

Things to know about university fees

  • Inflation for education fees is far higher than general inflation.
  • The cost of education fees varies substantially across the world.
  • As an international student (student studying overseas), you pay far higher fees than the local students.
  • Living expenses are not accounted in the university fees mentioned on the first page; therefore additional cash is required to meet your child’s needs.

It Pays to Plan Ahead For Your Children’s Education

Cost of education can be hefty; therefore here are few tips on what you can do to start savings for your child’s university education.

  • Take stock of how much money you currently have, and how much you can set aside today for your child’s education.
  • Estimate how much will your child’s university education will cost.
  • Work out the short fall.
  • Identify how are you going to make an up for the short fall:
    • Save more,
    • Invest wisely (Endowments, Bonds, Capital Guaranteed Products)
    • As discussed in our issue 0815 that investment in stocks, shares, unit trusts contains higher risk. This may result in losing your capital. So invest wisely.

You might like to talk to us about education fees planning. Our experience in building an education fund for your child will help immensely! We have a huge range of savings, capital guaranteed and growth education fee plans. Our plans can be backed by a payment protection scheme for a greater peace of mind, for example in event of unemployment, illness or death of the payer.

Planning early will also ensure that you can give your child a debt-free future!
(i.e. Taking a loan for education fees)

Financial Formulas – Time Value of Money

Calculate how much will your earn from an investment, for example in 1 years’ time.

Future Value of my money = my money today x (1+ interest Rate)

Let us assume, I have today S$10,000 and interest rate is 1.5% (0.015) for my investment, so how much will I earn after 1 year?

Future Value of my money = 10,000 x (1 + 0.015)
= 10,000 x 1.015
So at the end of 1 year I will have = S$10,150

Calculating for 10 years or 20 years can be complicated. Message ‘Investment Calculator’ on my hand phone along with your name and email address. I will forward an excel sheet calculator that will be yours!

Sandeep Prabhu profileby Sandeep Prabhu
Personal Wealth Manager

AIA TOP NEW FS Consultant – CS 2013