Want to educate your child overseas? Start saving - a lot | Fin24
 
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Want to educate your child overseas? Start saving - a lot

Aug 23 2018 09:00
Fin24

South African students wanting to further their education may think the average minimum cost of local university tuition is steep at around R35 000 per year, but that's before taking a look at the eye-watering costs of studying overseas.

A South African student wanting to study in the United Kingdom (UK) in 2019 will have to fork out R2.5m, wealth managers at AlphaWealth have said.

Moreover, if your child is still young, you could need upwards of R9m by the time they are ready to go – which means saving around R17 000 per month immediately.

"If you want to send your child to the UK in 2019 for tertiary education, you will need around R2.5m.

'Staggering costs'

"If you have a young child, you will need upwards of R9m by the time they are ready to go and you will need to start saving about R17 000 a month immediately, escalating by 10% per annum," says Charlene Prinsloo, wealth manager at AlphaWealth.

This is on top of whatever you are saving or spending for their schooling, she points out.

Prinsloo says wealth managers are increasingly being asked about the costs of offshore education after matric by high net-worth clients, due to a perceived decline in educational standards in South Africa.

However, she says, "we investigated costs and they are staggering".

Unprepared

In 2017, the PPS Student Confidence Index survey, conducted among nearly 2 500 fourth year and above students in SA, revealed that more than half the survey participants felt unprepared to transition from school to higher education.

A recent survey also revealed that more than three-quarters of Grade 4 learners cannot adequately understand what they read.

Prinsloo investigated how much a client would need to save to send their four-year-old to study at the University of Edinburgh, UK.

According to Prinsloo, if a client opted for this, they would need to begin saving approximately R16 769 per month, escalating by 10% per annum, to have sufficient capital to cover the four-year tuition and average cost of living in 14 years’ time.

This excluded additional expenses such as study materials, textbooks and cost of living.

Start early

Prinsloo recommends starting to save early for your child's education. "The longer you have to invest, the better," she says.

Her top tips include the following:

  • Align assets and liabilities. If you want your child to study overseas, your liability will be denominated in foreign currency. Then it makes sense to invest in that currency, which will protect the value of your investment if the rand depreciates.
  • Do your homework. Regardless of your child's educational needs, understand the budget required for your child's studies and cost of living and determine what's realistic.
  • Investigate scholarships. This can ease financial pressure for exceptional students, and the process of applying can be tricky, but there are organisations that can assist such as Crimson Education, says Prinsloo.

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tertiary education  |  student fees  |  money
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