Education Funding
Leave your child a lasting legacy: the gift of a quality education
A family typically spends a significant sum on their children’s education. After all, it is one of the best legacies a parent can leave their sons and daughters. Proper investment and planning will go a long way to ensure that you can afford to send your children to the school of their/your choice. Start saving early and make the next 18 years less about the bills and more about the joys of parenthood.
Plan now because the costs of higher education have risen faster than the general inflation rate
The costs of higher education have risen faster than the general inflation rate over the last few decades, making it more important to start saving for this expense as soon as possible. This is especially true in the developed countries that are the destinations of most international students.
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Financial Planning
DID YOU KNOW?
Among the findings of the Educational Policy Institute, Inc, an international non-profit, non-governmental, international organisation, on comparative affordability of education (in 15 countries with reliable data):
- Higher education is “most affordable” in Sweden, followed by Finland and the Netherlands, with their low educational costs, generous loans and grants
- The rest of continental Europe also have fairly low educational costs but have only limited student aid programs
- Higher education costs in the United States, Canada and Australia are offset by higher student aid and higher national incomes
- The United Kingdom and New Zealand are near the bottom of the ranking because of high educational costs and low national income
- Japan’s high education costs and low public student assistance make it the “least affordable” country. (However, the high savings rates of Japanese households may act as a counterbalance.)
Education is indeed an investment, and returns on this investment often exceed those from traditional investments. According to U.S. Census Bureau statistics, people with a bachelor's degree earn nearly twice as much on average than those with only a high school diploma. Over a lifetime, the gap in earning potential between a high school diploma and a B.A. (or higher) is more than $1,000,000. These statistics suggest that whatever sacrifices you and your child make for his/her college education in the short term may be repaid in the long term.
Higher education is found to result in an income differential throughout graduates’ working lives. In investment terms, it would be the equivalent of contributing money into an instrument which then pays out an annuity over a long period of time. The Educational Policy Institute states, in all countries, for males and females, private internal rates of return exceed 8% on an investment in tertiary-level education (when completed immediately following initial education).
References
- Educational Policy Institute, Global Higher Education Rankings, 2005
- College Board, Education Pays, 2006-07
- Organization for Economic Cooperation and Development, Education at a Glance 2006 http://money.cnn.com/2004/10/18/pf/college/college_costs/index.htm
DISCLOSURES
Please remember that with investments the value of shares and the income from them may go down as well as up, is not guaranteed and you may not get back the amount you invested. This could also happen as a result of changes in the rate of currency exchange, particularly where overseas securities are held
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