The cost of learning – Who is paying for your children’s university fees?


Are you an expat living in Phuket that has a young family, or maybe you are in the planning stages? If you have children, you may already be paying for tuition fees at a local international school, unless you are lucky enough to be on an expat contract with everything included by your employer. Whatever the case may be, when your youngsters are old enough to go to university, there isn’t going to be anyone to help you or your children foot the bills unless you come from a wealthy background.

As a parent, I naturally want the best education for my child, as all parents do. But after many years of helping my clients save for their children’s education, I have had to readjust my point of view. Currently, my thinking is “what is the best education that I can provide for them within my means, without landing my child or myself in a mountain of debt”.

This all sounds a bit dystopian, but the cold light of day is now telling us that university costs are rising at an astronomical rate and nothing suggest it’s going to cool down at any point in the near future.

The US is widely perceived as the most expensive place in the world to send your offspring for a university education, and rightly so. All ten spots of the top ten most expensive universities in the world are occupied by US institutions with Sarah Lawrence College in New York coming out on top with a staggering annual tuition fee of US$61,236 (about B1.91 million).

It didn’t always use to be this way. Back in 1971, the fee for going to Harvard was only $200, and this fee hadn’t been raised since 1949. Under the leadership of John T Dunlop, in the fall of 1971, he increased fees from $200 to $2,600, a leap of more than 17 times.

America is not the only place that has seen these kinds of jumps in cost. From 2002 to 2012 Australia saw a rise in prices of 166%. New Zealand has also seen the rise that other countries are benefitting from and have been quick to move on this.

Germany on the other hand still has free tuition fees for its domestic and international students. Unfortunately for prospective parents, this does not look like it is set to continue after the south-west state of Baden-Wurttemberg reintroduced fees in December of 2016.

What are my options?

This is the only easy part of the equation for the parent:

  1. Let your children pay for their own education
  2. Pay yourself for all of your child’s education
  3. Share some of the costs between both parent and child.

I think most of us will probably sit in the latter two options of this puzzle, as do I.

How and where do I save for this?

The answer to this question depends on your time frame, as it always does with the type of investment that you need to take up to achieve your goals.

If you are fortunate enough to have a horizon of over five years and you do not have a lot of starting capital, then the simplest way would be to save on a regular basis into some form of structured savings account.

Savings accounts collect money from your account every month which removes the need to have the discipline to save yourself.

Once the money has been collected, then your cash is invested into a broad range of mutual funds which have exposure to the financial markets. The goal here is to get your savings to work for you so that the growth of your investment can foot a large part of the bill.

If we take the UK as an example, you will need approximately $100,000 (about B3.12mn) to fund your child through a three-year university degree. (These figures have purposely been calculated in dollars for the simple use of most people)

  • $345 at 6% for 15 years Amount invested $62,100 – Amount at maturity $100,000
  • $610 at 6% for 10 years Amount invested $73,200 – Amount at maturity $100,000
  • $1435 at 6% for 5 years Amount invested $86,100 – Amount at maturity $100,000

Another option would be investing a lump of money at the outset and then leaving this lump of money to grow until your child is ready to attend university.

  • $41,0000 at 6% over 15 years – Amount at maturity $100,000
  • $55,0000 at 6% over 10 years – Amount at maturity $100,000
  • $75,0000 at 6% over 5 years – Amount at maturity $100,000

For anything less than a five-year time frame, then I would advise that you just put the money in the bank. You will naturally only receive 1-3% growth, which in reality is only securing your purchasing power by keeping up with inflation, but it’s probably the best way to save for the short term.

William Frisby of Hampton Bridge, is a British expat who has been advising clients in the Far East for the past 10 years. For more information on how savings plans work, email him at and quote The Phuket News.

Courtesy: Published at The Phuket News on February 18, 2018 by Wiliam Frisby

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