Financial journalist Maya Fisher-French and author of the must read personal finance website Maya on Money shares some insights on the exorbitant costs of offshore education for your children.
Increasingly wealth managers are being asked by their high-net-worth clients about the costs of tertiary education overseas, due to a perceived decline in educational standards in South Africa. “We investigated the costs and they are staggering,” explains Charlene Prinsloo, wealth manager at AlphaWealth.
In South Africa, the average minimum cost of university tuition is around R35 000 per year. Here are the minimum annual tuition fees in US dollars converted into Rands for some top international universities.
These costs exclude additional expenses such as study materials, textbooks and cost of living for the student which varies according to destination and the course studied.
Prinsloo investigated how much a client would need to save to send their four-year-old to study at the University of Edinburgh, UK. She established that 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.
Prinsloo notes that it will take a huge commitment and full family buy-in with kids at private schools for even wealthy clients to educate their kids overseas. “The sooner savings start, the better. Due to the large capital requirement, the longer you have to invest, the smaller the starting value.”
Prinsloo recommends the following:
- 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 over the period.
- Do your homework. Understand the budget required for your child to live comfortably and determine whether this is realistic. Many of the universities supply estimated tuition fees and cost of living for international students on their websites – this is a good base to work from.
- Investigate scholarships. Most offshore universities and colleges offer scholarships which can ease some of 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 assist such as Crimson Education.
This post was based on a press release issued on behalf of AlphaWealth.